Budgeting for Beginners in 2 Steps
Everyone is at a different point financially. For some, budgeting is a means to get more out of their hefty paychecks. For others, budgeting is a means to just get by. The complete setup of the stackbacks budget system requires a bit of start up money to create the checking account as well as time to actually make it to the bank. Some people need a different solution.
If you want to start budgeting right now, with little work, and no extra money, the solution is easy. I’ve simplified the budget creation phase into just two steps.
Step 1 - Schedule Expenses
Write down all of your expenses and when they occur. Total up this number to figure out how much you need to pay your bills. You’re list will look like this:
Jan 1, Rent $600
Jan 1, Student Loan $120
Jan 14, Car Payment $280
Total: $1000
The next step is to schedule the expenses by paycheck. In this step you’ll be figuring out which bills get paid from which paycheck. If you make $750 twice a month it will look like this:
Dec 15 Paycheck
- Rent
$600
Jan 1 Paycheck
- Student Loan
- Car Payment
$400
Step 2 - Pay Cash
After you’ve figured out how much you need to pay your bills, the amount you have to spend is easy to figure out. Just subtract your monthly expenses from your monthly wages.
Wages: $1500
Expenses: $1000
Left Over: $500
While you can spend this whole amount, you probably don’t need to. Roughly estimate how much you’ll need, and start with that number. If you decide to start with $60 a week, this would leave $260 left over each month to achieve your financial goals.
When you get your paycheck, and pay your bills, go to the ATM and get your spending money. All of it. For the next two weeks, this would be $120. Put away your card and don’t use it again. Every purchase you make, use this cash.
It’s that simple. You’ve got money allotted in your checking account to pay your bills and you have cash that you can spend. After just a month or two of this you’re going to feel great about your finances.
Live Cheaply
If you are just starting budgeting, this is not the time to upgrade your lifestyle. Take two months and live as inexpensively as possible. You’ve probably done it before and you can do it again now. Living on as little as possible makes the first leg of your budget work easy. The more frugal you are, the sooner you will have built up a good savings where you don’t have to budget paycheck to paycheck. That’s when it’s time to evaluate your lifestyle.
Further Budgeting
After a month or two of this, your bills are going to be paid and you’re going to have extra money. If you want to continue down the budget path and get even more out of your money, read the full budget system to get setup.
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