Just because a bill arrives in your Inbox on the first of the month does not mean you should pay it before your other bills arrive later. Once you have identified your reason for budgeting your money (your goal) you’ll need to prioritize your expected expenses to complete the goal-setting process. A study from the Dominican University in northern California reports that such actions can lead to a 71% greater likelihood of reaching your goal. To exponentially increase your likelihood of achieving the written goal, share your goal and plans with someone else and then report your progress on a regular basis. Your goal(s) should identify what you want to do that requires you to budget and save, when you want to make the purchase or spend the money (include date and year), and how much money you will need (both total amount and how much that breaks down to on a monthly basis). Goals give budgets meaning, and meaningless budgets waste your time and energy. Without associated budgeting goals, this frustration will lead to desperation or to the abandonment of the budget altogether. The resulting frustration requires time, effort, and sacrifice in order to resolve. Without goals, budgets simply become math exercises in frustration: you add, you subtract, you fail, why continue?Įveryone who has tried to budget has found that their hoped-for expenses add up to more than their income. Without correlating your spending plan to a goal that requires you to prepare financially, your budget will likely fail. The five budgeting steps below will guide you through the basics of creating a spending plan to help you get what you want out of life.īudgets work best when you tie them to personally important financial goals (e.g. Monthly budgets can also work well for individuals and households with irregular income, such as small business owners and freelancers. For months with a third paycheck, use it to fund your top priority short-term and long-term goals, such as vacations, retirements, emergency savings, etc. If you are in such a situation, consider creating a monthly budget and using your first paycheck of the month to pay your bills for the second half of the month and your second paycheck to pay the bills for the first half of the next month. However, individuals and households with bi-weekly paychecks (paid every two weeks rather than twice a month) know that about twice a year they will have three paychecks in a single month. Monthly budgets tend to work best because most recurring household bills come monthly. Most budgets align to a monthly plan for simplicity’s sake, but you can create a weekly budget, a twice-a-month budget, a quarterly budget, or an annual budget. Budgets are simply plans for how you would prefer to spend your money.

Basic income and expenditure template