You will come to learn that the B word is my best friend. Budget…
Watching my mom make a list every month of how much she was going to spend whether on groceries or new clothes for my siblings was always exciting. I loved to find out if she stayed within her budget or went over and how she could do better next month.
If you are new to budgeting I recommend starting off simple (I have reached expert level so my budget splits out expenses as fixed and variable, long term and short term but you don’t have to get this crazy). A simple budget is a list of all your monthly expenses sorted into categories.
The first category is essential expenses. This means no matter how much money you make, what age you are or where you live everyone has these bills. A few examples are car insurance, groceries, utilities, mortgage/rent etc. (You may live in a city where you can take public transportation or live with relatives every situation is different, just remember make your budget fit your lifestyle.)
- Medical expenses
The next category is incidental expenses, these are things you spend money on that, if you had to stop today would not keep you from living your life. Shopping, going out to restaurants… You need clothes to wear, if you don’t then you risk getting a ticket for indecent exposure but shopping for clothes every week is not necessary. Going out to eat is also minor in the grand scheme of things. Take it from me this section is where you will probably start to see dwindle first once you start budgeting.
- Home improvements
The last category is miscellaneous expenses, this is for things you spend on others and entertainment for yourself. Wedding gifts, birthday presents and anniversaries are a few that come to mind. Living on a budget doesn’t have to be draining or suck the life out of you. You can still go places just as long as it is within your means.
Again the categories listed here are just a few to get you started out. I will show you later on the first steps to take when budgeting, the tools you will need and putting yourself in the right mindset.