How to Start a Budget

This is month three of setting a real budget for my husband and me. Seeing as we’re so new to this, we don’t claim to be budgeting experts. However, I’d like to share how we got started and our experience so far.

Budgeting process

1. I started our budget by making a list of all of our expenses. I looked at previous bank statements to get an idea of what types of things we spend our money on.

2. I created a spreadsheet with this list in one column and made two additional columns. One was called “Budgeted Amount” and the other “Actual Amount Spent”.

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3. Then, I started filling in the amounts of expenses that stay the same (or almost the same) month to month in the “Budgeted Amount” column. Some of these expenses included rent, internet, car insurance, and church giving.

4. I then filled in the rest of this column with what we spent the previous month on other expenses that vary from month to month. Some of these expenses included groceries, household items, gifts, and eating out/entertainment. I used these numbers as a starting point when trying to anticipate next month’s expenses.

5. I thought about what kinds of things we’d be doing for the upcoming month. I tried to get as specific as I could. For example, I knew I’d be having a girls weekend out of town. I tried to predict approximate gas cost, eating out, and any other kind of entertainment costs for that weekend. I thought about where I was planning to eat, and how many times I would eat out.

6. Then came expenses specific to my husband, Rick. After I drafted a budget with the knowledge I had about money that I spend and we spend, I sat down with him to fill in the gaps about more of what he spends or planned to spend that upcoming month.

7. We looked at where we could cut costs and made sure we weren’t spending more than we were making.

8. We scheduled a date at the end of the month for a Budget Meeting to finalize our budget. On that date, we also added a tab on the spreadsheet of our current financial state. We listed the amounts we had in all of our bank accounts and wallets. On an additional tab, we listed our anticipated income for the month. Our paychecks vary depending on how much we travel for our jobs, so we went with the lowest amount we had been paid in the last two months.

So, there we had it. Our very first official budget.

It was far from perfect.

The important thing was that we got started. It wasn’t important for that first month that we forgot to put in a line item for car maintenance/repair or that we went over our set amount for gas. We made some mistakes, learned a lot about what works for us, and we made adjustments the following month. Our finances were still in a much better state with our imperfect budget than with no budget at all.

Starting out, I was a little nervous. I thought that putting limits on our spending would make me feel trapped. But I actually love budgeting now because I feel more in control of where our money goes. We spend with intention instead of frivolously buying what we want in the moment.

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