Setting up a budget that works for you is a great first step in figuring out your finances. But it seems like so much of this advice assumes you already know where to write it down or how to figure out what goes in. We thought we’d pull together a few really practical tips for starting to craft your budget.
Use What You’ve Got
How do you keep track of birthdays, your shifts at work or anything else in life? Some people use Google Calendar, others like a physical version. Use whatever you’ve already got to build your budget on.
Figure Out How You Spend Money
Do you have credit cards (including store cards)? Lines of credit? Debit cards? Automatic payments? A checkbook? Cash you pull out at the beginning of the month? Make a list.
If you have roommates or split finances with a partner, write down all the expenses you share. This is especially important if certain charges go to their bank accounts, because you might not remember that they exist if they’re not in your own account history.
Round ‘Em Up
Open up every app, every website and even your checkbook log. You’re going to be looking at every way you spent money over the last month (to start with).
This one takes a little finesse. The most obvious expenses to keep track of are the ones that you know you have to pay, like rent and the power bill. But what about that weekly Chipotle trip? You can either count it as a regular expense, or start without it and see if it fits within your budget.
Consult the Calendar
Write down all your expected paychecks for the next few months on whatever calendar you usually use. Then assign those expenses to a pay period. If you’re like most people, rent or your mortgage will be a major one.
See If It Fits
The moment of truth. Have you shoved too many expenses into one pay period? Do you regularly expect to be able to pay your rent, internet and water bill all at once? Does the math add up with your expected paycheck?
Move some of your expenses around to different pay periods. Yes, this will make your calendar hideous for a month if you use a written one. It’s worth it, though.
Insert Long Term Things
If you pay your car insurance less often than once a month, you’ll need to figure out how to handle that. Do you put a certain amount away each month? And what about your emergency savings? If you have pay periods with fewer expenses, you can put them in there.
Be Real With Yourself
Do the puzzle pieces just not fit together? Look, we know that not everything can be cut, and some situations just don’t allow for us to make huge changes to our expenses. But if you know that financial troubles are ahead, you can at least start figuring out how to handle them before you’re in the thick of it.