Creating a budget is no easy task. It requires you to be honest about your finances and take inventory of everything you spend. I find that most people will often avoid creating a budget or will purposely leave things out of the budget to avoid the embarrassment of what some may consider frivolous spending. Keep in mind, however, there is no sense in creating a budget if you do not account for everything you spend. Don’t worry about justifying your expenses right now. Obviously, that will come later, but for now you need to know three steps when creating a budget: your income, current expenses and finally categorizing what’s a necessity vs. want.
Let’s say, for example, that your family’s income is $3,500 per month after taxes. That is your income and for argument sake, your total expenses is $2,800 per month (make sure you itemize every expense). Well, once you know those two items (income and current expenses) you can start the arduous task of justifying your expenses. For example, do you really need to pay $85 per month on Dish or buy a $4 latte at Starbucks each day? This is where reality starts to set in and sometimes we don’t like what we see. Now, I’m not saying you have to cut every item that is classified as a want, but you should be aware that you do not necessarily need it. Perhaps you find a compromise and eliminate the $4 latte’s. I know that I’m not willing to give up my Walking Dead just yet.
If you are interested in creating a budget, I would suggest tracking your spending for at least two weeks or even better a month. There are numerous templates out there to use. I hope this has been helpful. Good luck creating your first budget.