The Monthly Budget and Yes You Need One
Use a Budget to Control Your Money
When we gain control over our finances, many positive outcomes will follow. The door to new opportunities will open to us, and we will have more lifestyle choices to consider. How exactly do we control our money? We set financial goals, monitor our spending, keep a debt limit, save regularly, and invest wisely to achieve those goals. The very first step on the journey is following a budget.
A Budget is Powerful
A budget is a map we follow on the road to establishing a positive relationship with our money. With a budget, we can better plan how to spend if we know how much we have left after paying all the bills. When we have a snapshot of our spending habits, we will be more likely to use discrimination in our purchases.
We need a budget because it is critical to keep our financial house to build our future. Budgeting can help you rent and furnish your first apartment, buy your first home, take a vacation, and begin planning for retirement. (Honestly, it’s never too soon) That is powerful stuff!
Budgeting Tools
We all need a tool to keep track of income and expenses because it’s critical to know where our money goes every month. Many apps are available to help you monitor your finances, such as Mint, Wally, Envelopes, and You Need a Budget. Some are just plain and straightforward budgets, while others help you save or invest. Many are free, while others will cost you. Don’t forget you will need to include the fee in your budget. 
If you are not app inclined, another option is to keep a spreadsheet. Many of these are free, and some are not. Many are very specialized. You can find Weekly, monthly, yearly budget spreadsheet templates and some that will help you pay off debt or save money. You may also opt to use one of the spreadsheet templates that come with your Excel program, which is what I do myself.
Create a Budget
We will work with a monthly budget since that is the most popular. List income from all members of the household. Salary after taxes, tips, commissions, interest, dividends, child support, alimony, unemployment benefits, Social Security, Disability, public assistance, Veterans benefits are income examples. When you add all the income items together, this is how much you have to spend each month.
Next, you are going to list all your expenses. The best way to do this, especially when you are new to budgeting, have a large amount of debt to repay, or are saving to buy or remodel your home, is to break your monthly expenses into categories. This method lets you do a deep dive into where and how you spend your money and points out possible areas where you can trim your expenses.
Housing
In this category, you will record your rent, utilities, renter’s insurance, and any other expenses that are attached to your home. You will list mortgage, taxes, insurance, utilities, water, sewer, and sanitation if you own your home. Do not forget about Home Owner Association fees if you have them and any regular maintenance fees such as landscaping and snow removal.
Transportation
This category will include your loan or leasing fee, taxes, registration, insurance, gas, maintenance, and repair costs for your car. Don’t forget the train or bus fares if you use public transportation as well as parking or garage fees.
Other Necessary Expenses
This category includes groceries, health insurance, medications, credit card or student loan payments, health care, haircuts, phone service, and professional association or union dues.
Discretionary Spending
These are expenses that you don’t need to survive and that you could trim if you had to do so. This category includes cable TV, internet, live streaming services, subscription services, gifts, health club membership, mani-pedis, massages, yoga class, dining out, entertainment, vacations, clothing, home décor, and furnishings. It would help if you recorded every dollar you spend, including morning coffee from your favorite barista and the new tube of cotton candy pink lipstick.
Hopefully, when you deduct your expenses from
your income at the end of the month, you have 15-20 percent left over to allocate to paying your debt and savings. If that is not the case, you will need to review your expenses to cut back, starting with the discretionary category. Because you expensed every item, you can determine your spending weaknesses and modify your behavior.
Try not to think of living on a budget as a punishment because it genuinely is not. A budget is designed to be helpful and enable you to approach your finances realistically. You need not cut out all the stuff you enjoy from your life. Try to find ways to trim spending that will not feel like a sacrifice. If you find you opt for live streaming most often, perhaps you can get rid of cable TV. If you love to read and buy several books a month, consider the library instead.
Above all, keep in mind that getting control of your finances will reap substantial rewards down the road. Modifying your spending will allow you to have the things in life that matter most to you. It will keep you from worrying about what will happen if your water heater needs replacing, your car breaks down, or you lose your job unexpectedly. That in itself is priceless.
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