We’re super excited to share with you a fun and straightforward guide on creating your budget in just seven easy steps. We’re going to break it down for you, so it’s not overwhelming at all. We’re here to simplify it for you. Our seven steps will demystify the process and make it so easy that you can complete it in about an hour.
You see, there’s a lot of talk about the importance of having a budget, but often, there’s not enough information on how exactly to create one that suits your unique circumstances. And that’s where the confusion and frustration kick in. We’re here to solve that problem.
Think of this as your step-by-step tutorial on budget creation. Consider it the budgeting lesson you should have received in school. We’re going to guide you through the entire process, and you’ll see that it’s not as complicated as it may seem. So let’s get started on this budgeting adventure!
But before we dive in, let us tell you a little secret. Financial coaching is available for those who want to improve their financial situation but struggle to do it on their own. We offer personalized sessions where we meet twice a month for 45 minutes to help you create your budget and set up systems to make it automatic and efficient. If you’re interested, feel free to click on the link below or reach out to us at email@example.com. We’d love to hear from you!
Now, let’s jump into the first step of creating your budget: determining your income. This involves calculating all sources of income you receive in a given month. Here are some types of income to jog your brain:
- Freelance earnings
- Side hustle income
- Child support
- VA payment
- Retirement funds
- Tax refunds
- Moving allowances
- Everything counts!
The income step is the best part of the budgeting process.
It’s like looking at a sunny sky with clouds parting to reveal a glorious sun. Why? Because it’s all POSITIVE ! You get to see the total sum of money you make, and it’s exciting because there’s no subtraction yet. 😉 So enjoy this part and embrace the positive vibes.
However, there’s a catch. To make your budget work, you need to know the exact numbers. Every dollar that comes in must be accounted for and assigned a specific job. Without a clear picture of your income, you can’t allocate your dollars effectively. So remember, precision is key!
But what if your regular income doesn’t cover your budget?
For those with irregular income, such as business owners or commission-based positions, budgeting requires a slightly different approach.
- Begin by examining your lowest average month in income.
- Identify the minimum income you need to cover your expenses comfortably (this should equal your lowest month or else you need to 1. change jobs or 2. get a second job or 3. reduce expenses further)
- Plan using this lower income. When you get excess, put the income into a holding account to pull ensures you can meet your financial obligations during leaner months.
- If your income exceeds expectations, steward the surplus wisely to fund your goals (paying off debt) and bills strategically.
Are you getting paid what you’re truly worth?
Take a moment to reflect on your income. Are you getting paid what you’re truly worth? It’s an important question to ask yourself. Sometimes, we underestimate our value and settle for less. Look at the effort you put into your work and evaluate if a raise or bonus might be warranted. You might be surprised by the results! All your boss can do is say no after all.
Here are some more tips about the income step in your budget:
Do you get paid monthly, weekly or bimonthly?
We (Vanessa & Shana) both have distinct pay schedules—weekly and twice a month, respectively. Despite their different payment intervals, both have mastered the art of budgeting to suit their needs. We help our clients do the same. The key takeaway for you is that budgeting can work regardless of how often you get paid. What matters is creating a budget that aligns with your income schedule, ensuring financial stability and peace of mind. In fact, no matter WHAT your pay frequency is, we can help you systemize your budget so it really doesn’t even matter when you get paid.
What to do when there’s not enough income
Sometimes you have a spending problem and you need to reduce your expenses. Other times, you’re living lean, there’s nothing else to cut but your income just isn’t enough. If your income isn’t meeting your needs, you might need to change jobs, get a part time or seasonal job temporarily. Many of our clients are nurses and they have often picked up extra shifts on their journey to get out of debt. Remember, this isn’t a permanent solution but a means to achieve your financial goals. By taking proactive steps to increase your income, you can alleviate financial stress and move toward a more stable future.
The Power of Combining Finances
Combining finances as a couple can streamline budgeting and eliminate unnecessary complexity and stress. While trust issues or past financial mistakes may have hindered joint accounts in the past, working together and aligning financial goals is a MUST. Consolidating accounts and expenses allows for better organization, transparency, and efficiency in managing your finances. Yes, you’ll have to intentionally improve your communication and mutual understanding as a couple, but that’s a good thing that will pay dividends into your marriage in the future.
Budgeting doesn’t have to be daunting, even when faced with paycheck quirks or irregular income. By embracing your unique financial circumstances and making proactive choices, you can create a budget that works for you. Whether it’s negotiating a raise, taking on additional work temporarily, or combining finances with your partner, mastering your budget empowers you to achieve financial stability and work toward your long-term goals.
If you make a lot but also spend it all, it means nothing that you make a lot.
You might be amazing in bringing in a LOT of income every month. when Congratulations, you’re amazing. That is a huge accomplishment and we honor that. You are really good at something, or things!
However, if you’re spending it all , it means nothing.
Having a high income is commendable, but it loses its value if you’re spending all of it without any financial plan. It’s like disrespecting your hard-earned money and allowing expenses to drain it away. The goal should be to make a substantial income and have something to show for it—whether it’s saving, investing, or smart financial choices that align with your goals. It’s important not to let all your money flow to various expenses because that doesn’t honor your financial achievements. Instead, prioritize creating a budget that allows you to accumulate wealth and find satisfaction in managing your income effectively.
In a recent budgeting session with a client, we demonstrated the impact of reducing debt payments on their budget. By eliminating smaller debts and restructuring their expenses, they discovered significant leftover money each month to put toward bigger and better goals. It was a breakthrough moment for them, realizing that even with a good income, adjusting expenses can provide financial freedom and a sense of accomplishment.
Remember, your income is the foundation of your budget, and managing it wisely is the key to financial success and satisfaction.
Book Your Free Call Now!
We are excited to create the time & space to talk to you about your current money situation. This is a free, no-obligation call where we can answer questions you may have and maybe find some quick wins for your budget.
What do you have to lose?