Estimated reading time: 9 minutes

I totally geek out when it comes to preparing a budget and seeing the numbers come together. I’m even happier when I’m living on a budget and the numbers actually end up less-than I projected, leaving me with even more money  to play with! 

I’m a risk-taker when it comes to investing (and, well, life in general), but when it comes to “extra” money in my checking and savings accounts, I’m the complete opposite. Trust me, though, when I say this wasn’t the case for a very long time. Living on a budget wasn’t easy until I figured out how to get my head in the game.

You’ve heard the saying, “There’s not enough month at the end of the money.” Does this sound like you? Do you check your account and wonder where your money went at the end of each paycheck? What do you do? How are you going to cover your bills, food, and necessities? 

If this is the case, it’s time to look at putting a budget together—and I promise, it won’t hurt a bit!

“A budget is telling your money where to go instead of wondering where it went.” –  Dave Ramsey

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The Hardest Part of Living on a Budget: Where to Start

So, you’ve decided to start living on a budget! Great—where do you start?! Since you’ve finally  decided you’re going to proceed with creating this “budget,” you’d better start now before the mood passes.

I literally laughed out loud reading this back to myself because this completely mirrors  what my sentiments were about creating a budget! I would think of any  excuse I could to avoid the creation of this “masterpiece,” such as:

  • I don’t really need  a budget.
  • I should really “carve” out a significant block of time during the day—or even the weekend—to create it. After all, a masterpiece takes  time (insert rolling eyes here).
  • And the doozy: I’ll wait until the 1st of the month to start, since the slate will be clean and circumstances will (magically) improve by then.

Lies, lies, lies!  What was ultimately holding me back—why I wanted to avoid creating a budget altogether—was that budgeting forced me to face the truth of how much money I spent,  and on what!  Yikes!  Talk about hard truths!

“A budget tells us what we can’t afford, but it doesn’t keep us from buying it.” – William Feather

Why Creating a Budget Feels Scary

Truthfully, it was a little (okay, very) scary for me to buckle down and face my finances. It’s one thing to blow smoke at those around you, and think  they are buying whatever you’re feeding them, but it’s an entirely different story when you have to get brutally honest with yourself.

Like many Americans, I liked the “idea” of living on a budget but I wasn’t sure about the reality. Thinking about creating a budget to better your financial situation, versus actually creating a budget  entails more than going-through-the-motions; it requires a change in your mindset.

Sometimes (okay, almost  always), change is a tough one to tackle for one big reason: embarrassment! I get this! Part of your monthly expenses may include several not-so-little debts (like that high-interest credit card), and thinking about debt is overwhelming at best and mortifying at worst.

“It’s clearly a budget.  It’s got a lot of numbers in it.” – George W. Bush

Truth-be-told, I’ve had debt—and I’m talking a lot of  debt, both personally as well as professionally. I was determined to get out from under that burden. It was tough and it was embarrassing. But I reached a point where I didn’t care what I had to do or give up or how long it took. I had to get brutally honest with myself and to commit fully, I gave myself a timeframe of when I would see the light at the end of the tunnel and start making a dent in my debt.  

I had plenty to show for my debt, but my future looked uncertain. I knew my debt wasn’t there because I didn’t like pretty things, because clearly, I did—and still do. But since I almost always bought  the pretty thing, those results clearly showed in my debt. I had to start living on a budget.

So, if you’re in a similar situation, it’s time to stop avoiding and stop being embarrassed. Here are the 4 steps to living on a budget and getting your finances under control!

1.     Block Out Time

Every good goal (including financial goals) are time-bound. This means creating time NOW to start budgeting. It also means setting up a timeline for tackling your goals.

When I started living on a budget, I gave myself a specific timeframe for each liability I wanted to conquer. I tackled this by targeting a particular debt and either reducing it (again, by a specific timeframe) or paying it off completely. Once I had crushed one debt, I was on to the next liability.

“Budget: a mathematical confirmation of your suspicions.” – A.A. Latimer

Do you see how my mindset had to change if I wanted my situation to change?  It certainly wasn’t easy, and yes, living on a budget sucked at first, but it got easier and easier as time went on. Eventually, I finally achieved my goal of being debt-free, and yet, I still create and live by a month-to-month budget to this day.

Here’s the deal: you can’t live your life thinking you will forever dwell in “deprivation mode.” Because if you do, you won’t bother taking the time to start. And believe me, by breaking your biggest goals down into smaller, more manageable bites, you will get there. There is a light at the end of the tunnel, even if you can’t see it yet.

2.     Find the Right Resources

If you’re ready to create a budget but aren’t too sure where to start, check out my post on breaking down your finances, where you will find a very  comprehensive Monthly Budget Workbook. This workbook covers every possible expense you can think of and is a helpful starting point for putting you on the right track.

“Budgets are blueprints and priorities.” – Kevin McCarthy

It may not seem significant to you, but the fact you’re starting to budget is a huge  step! To put your mind at ease, there are many ways to create a budget, so I don’t want you to think there’s only one-way or no-way at all. What I’m doing is providing a starting point because, ultimately, whatever you end up using as a tool for budgeting needs to work for you in the long-term.

When initially setting up my monthly budget (and since I’m a bit old-school), I’m a big fan of starting with a good ol’ notepad where I jot down all sorts of changes, complete with scribbling, scratch-outs, arrows, and so on. The draft of my budget is never  pretty, and it doesn’t need to be.

The point is to just start by jotting down dates of money coming in, times of expenses going out, and maybe throwing in current balances due before finalizing the numbers and transferring them over to the Monthly Budget Workbook. Of course, you can modify your budget any way you want, but at least this gives you a quick guideline to use as a reference.

“It’s easy to meet expenses – everywhere we go, there they are.” – Anonymous

3.     Write Down Income and Expenses

When I set up my budget, I set aside some time (not a whole weekend, of course, but maybe 30-60 minutes).

First, I write down the date and amount of money I expect to come in for the month. What you take home is called your ‘net’ pay. So, if you get paid twice a month, let’s say on the 1st and the 15th, split your page in half and indicate the actual dollar amount next to each of those dates.

Next, I write down all of my monthly expenses and I designate a number next to each expense in the order of importance to me. The reason I do this is when I’m looking back over my budget from the previous quarter (and when I’m creating the next quarter), I can quickly see if there’s an expense I’m missing by examining the number associated with the expense. The number sequence may change as expenses are alleviated.

Depending on what stage you are in your life, monthly expenses are different and will likely change over time. To give you an example, since my daughters are grown, I won’t have any daycare costs, and since I work from my home, my fuel costs are minimal. Your budget might look different, but to create a budget snapshot, you need money-in and money-out.

Also, if you pay any of your expenses annually, it will have a positive effect by adding to your monthly discretionary income. It could also lessen the overall cost because interest charges for carrying a balance are eliminated. Lastly, of course, you must keep in mind that expenses will vary according to where you live.

“Budget affects everything.” – James Pearse Connelly

4.     Pay Down your Debts One-by-One

You will see that by keeping your format simple, it’s easy to track your budget as well as your ongoing progress. By taking a portion of your discretionary income and paying your bills off one-by-one, you’ll find it becomes a game to see how fast you can pay off your next bill, and then the next; otherwise known as the debt snowball effect.

If you’re living on a budget but you don’t have any discretionary income at the end of the month, it’s time to consider a different action. Either reduce your expenses (phone, cable, deductibles on your auto and home insurance, etc.) or look into a legitimate side-hustle for additional income. I emphasize “legitimate” because there are many that aren’t.

Once you’ve committed to getting your finances under control, you will see progress quickly. Build on each “win” and use that momentum to keep you on track. Living on a budget doesn’t mean misery and frustration. It actually gives you freedom in the long run.

I’m confident after you’ve created your masterpiece and you start seeing the results, you will want  to keep living on a budget without any hesitation.

And finally, along with getting your monthly budget in order, you may also want to consider taking a look at 6 Simple Steps to Get Financially Organized. Along with valuable information, it also has a great checklist to use when it’s time to consider the more significant aspects of your personal and financial life.

I’m so excited to invite you to join our Financial Success Society Waitlist! Our very limited enrollment opens ONCE A YEAR (so don’t miss a chance to get on the notification list). Your journey to financial success is unique and this exclusive membership will offer you financial accountability in a supportive, safe space to move financially-forward on your journey. At Making Cents Count, we offer an array of outstanding products and services to help you get control of your finances so they won’t control you!