The word budgeting can stir up a mixture of emotions. The idea of creating and maintaining a budget may bring on feelings of anxiety, fear, and frustration.
Despite these feelings, budgeting is super important. Especially if you are about to have your first baby or if you’re adding another little one to the mix.
At a very basic level, budgeting will keep you from spending more money than you bring in each month. Which is critical, because when you overspend, you go into debt and start digging a hole that can be hard to get out of.
Budgeting can help prepare you for emergencies and ensure you are spending money on what you actually need. Ultimately, it puts YOU in control over your money, rather than the money controlling you.
Now that sounds like something you can get behind, right?!
Like most things in life, starting is sometimes the hardest part. That’s why we’ve put together this step-by-step guide to get you started on your first budget.
Remember – it may seem overwhelming right now, but after you do it for a few months, it will become easier and easier.
- Set Your Goals: Before you get started, take time to think about your goals. Do you simply want to be in a better financial position, or do you have something specific you are working toward? Maybe you need to put a security deposit down on an apartment. Maybe you want to save to create a beautiful nursery for your new baby. Maybe you want to take your kids to Disney World. Maybe you just want to be debt-free.
Thinking through your goals is important, because as you create your budget, it will be easier to make sacrifices for specific things you are working toward. These goals may not be fulfilled within the first few months or even years. But if you stay disciplined and stick to your plan, you can do it!
- Create a Budget Tracker: To track your budget properly, you’re going to need somewhere to track each dollar that comes and goes from your accounts. You can do it the old-fashioned way with paper and pencil, you can create a spreadsheet on your computer, or your bank might have a budget tracker built into its website. Ramsey Solutions also offers a free version of a budget tracker, and NerdWallet breaks down other options available to you here: https://www.nerdwallet.com/article/finance/free-budget-spreadsheets-templates.
No matter which option you choose, be sure it’s one that you find easy to use.
- Add Monthly Income: Once you have your tracker, the first space you will fill in is how much you make each month. Include all of the money that you bring in – including paychecks, unemployment payments, checks from temporary jobs, and child support.
- Create Spending Categories: Once you have your income listed, it’s time to get out a recent bank statement and create categories for all of your expenses. Divide expenses into categories like household, transportation, health care, restaurants, groceries, entertainment, clothing, and pet care. Every expense will need a home, so be sure to include everything. You can have a miscellaneous category to track one-off or random expenses – but try to limit the number of expenses you include here. Depending on the budget tracker you select, they may also provide sample categories to get you started.
- Track the Needs: First things first, track the expenses that are absolute needs. We’re talking about the very basic necessities for you to live. That includes your rent or mortgage, utilities, groceries (not restaurants), and transportation expenses (such as a car or public transportation).
Again, only track the essentials in this step.
- Track Remaining Expenses: Now this is where we get to the hard part – tracking the remaining expenses for everything else you spend your money on. Some of these may be more necessary than others. But this is where you start to figure out priorities and if there are places to cut back and rearrange.
Expenses like health insurance, childcare, and medications are more important than eating at restaurants, getting your nails done, or buying new clothes. As you add in these expenses, you may be surprised at how much you are spending.
- Address the Debt: If you have debt, including credit card debt or any type of loan, you’ll need to deal with this next. Ramsey Solutions recommends that while you are creating a budget for the first time, only focus on paying the minimum payment due (which can normally be found on your bill statement).
- Saving for Your Goals: Finally, it’s time to save! You may have arrived at this step only to realize that you don’t have any money left to include here. If that’s the case, you should revisit Step 6, and figure out if there are any places you can trim down.
When you are just starting to save, you may want to consider building up an emergency fund for any unexpected expenses that come up. But eventually, this section will be the place you save for the goals you came up with in Step 1 – such as major purchases, a security deposit, a down payment, or even a vacation!
If this process felt like it took a long time or was really hard… that’s perfectly normal. It will likely take you a few months to get into a groove and figure out what works best for you. Keep in mind that each month brings something different, so it’s not unusual to make adjustments to your budget from month to month.
However, before you know it, budgeting will become part of your normal life, and you will find yourself more at peace with your finances, knocking out debt, and saving up for your big dreams.
Have other budgeting tips that worked for you or your family? Want to know how others in the Health for Her community handled a budgeting situation? Interact with other moms in the comments section!