First of all… what is the definition of a “balanced budget”? You’ve heard the government get heat for rarely balancing, so you know it must be important. But that’s just the government. Do I really need a balanced budget? I mean, I’m only managing one person’s finances, not the entire country’s.

How does that make you feel? At the end of the month, you aren’t in the positives or the negatives. You are perfectly balanced. Holy crap, someone referred to something in your life as “perfect”. Now you’re on board. Ay Ay Captain!

We all know budgets are good for maintaining bill payments, keeping finances in order, and helping us to avoid overspend. But how exactly do I make one?

Follow my 10 simple steps, and then watch this video made by Investopedia (because they break it down real nice).

Step 1 – What is your monthly income after taxes?

Step 2 – What are your fixed expenses? (ie. Rent, Utilities, Insurance)

Step 3 – What are your variable expenses? (ie. Groceries, Gas, Phone Bill)

Step 4 – How much do you put towards savings?

Step 5 – Insert all of above totals into a spreadsheet.

Step 6 – Calculations give you a green light or a red light. What color is yours? If it’s red, we have a problem. If it’s green, I have a solution.

Step 7 – If red, adjust spending to live within your means.

Step 8 – If green, congratulations! Now is your time to choose where these good “expenditures” go. Savings? Investments? Emergency fund? The world is your oyster.

Step 9 – $0 total? Wow, you’re better at this than I thought.

Step 10 – Repeat steps each month to keep spend in order and reach financial goals.

Investopedia Video!

I know this might not be a homerun the first time, or first few times, but here’s to hoping. Budgets and finances can often be overwhelming, so it’s important that you find a way to make it fun. Challenge yourself with a new goal each month.

Goals that you can set should always be SMART (Specific, measurable, achievable, realistic & timely). Set short, mid, and long term goals that give you something to look forward to at different points throughout the year, or years to come.

The last thing to consider is that a spreadsheet might not be the best budgeting tool for you. I personally write down my expenses by hand and then review from there because I feel much more accountable this way. You might be most successful by using a budgeting app, or website. If this is your first time creating a budget, give yourself time to get comfortable in knowing where your spend goes. Don’t put too much pressure on yourself to make it flawless.

What are some of your favorite budgeting tools?