Learning to Budget: Step 2 - Make a Budget + Free Printables

Once you have completed step 1 of our budgeting series, Get a Plan, you can move onto step 2.

It's time to sit down and spend some quality time creating your budget.

I have created a free printable budget sheet which you can download here. I have taken a number of different budget sheets and created ones that work for my needs. I hope they work for you too. 

These budget sheets are designed to be filled out and used every month, and are broken into three sections.

1. Income Sources
In this section you will list ALL your income sources - salaries, benefits, gifts, etc. Use your after-tax take-home income sources - whatever amount is deposited into your bank account - that's the amount you want to use. If you use your pre-tax income and forget to remove your taxes, you are setting yourself up for failure because you will always run short of income by the end of the month.

2. Recommended Percentages
This section will be filled out once you have all your expenses determined. You will divide each expense by your total income to determine how your income is being spent, and where you need to work and improve. I have found this very helpful - we are spending {gasp} almost 50% on transportation! But now that I know this, I can start to address it.

3. Expenses (both fixed and variable)
On the budget sheets I have tried to list all possible expenses, and they are divided by category. Include all your expenses that you will pay out each month, and then also include the different items you may not pay out that month, but need to save up for. For example, we pay our license fees once a year, but if you save a little each month you will have the amount when you need to pay it out, rather than trying to find that extra cash on the month it is due. When there is an asterisk (*) you are supposed to use cash for these expenses. Once the cash is gone, it's gone, so budget and spend accordingly.

The expense sheets have 5 different columns to fill out.

Monthly Total - this is where you write the amounts of your monthly expenses. If you have weekly expenses, multiply this amount by the amount of weeks in a particular month.

Payment Frequency/Due Date - include when the expenses are due and how often you pay them. We pay our mortgage every week, so I write "every Friday" in the column next to the mortgage. This helps to keep track of when the money is due so you can ensure the money is in the bank, and your bills are paid on time.

Actually Spent - this is most important for items where you use cash and other expenses that are variable. You fill this section out at the end of the month, or after an expense has been paid.

Paid/Saved - I added this section to keep track of expenses that I have paid, and also to keep track whether an item has actually been paid out, or if the amount needs to be saved. 

Importance - this section allows you to mark the importance of an expense. Our paycheques are erratic and irregular, so this helps me to know which expenses are the most important. I put a star beside the expenses that are most important and MUST be paid.

Here are some tips on creating a successful budget.

1. Be honest and realistic. Don't inflate your income, or lower your actual expenses. It may be tough to realize how little you make, or how much something costs, but it's important to be honest to be successful. Make sure you create your budget in a way that works best for you, and don't be in denial.

2. Write down EVERYTHING.  Include ALL your income - if it's your birthday and you get cash gifts, include these on your sheet. Include ALL your expenses and plan ahead!

3. Budget for life events. Certain life events occur every year and you should budget for them accordingly. If you plan on purchasing gifts for birthdays and Christmas and anniversaries, put a little bit away every month so that when you need the money to purchase those gifts it's there. If you want to go on a vacation save up for it!

4. Use cash for certain variable expenses. If you read the Total Money Makeover, Dave Ramsey refers to this as the envelope system. Every week or month you fill each category envelope with your budgeted amount of cash, and then you spend accordingly. You don't use your debit or credit card once this cash runs out. Once it's gone, it's gone.

Use cash for food (grocery and restaurants), vehicle gas and repairs, clothing, babysitters and entertainment, and toiletries. 

5. Calendar System. Along with my budget sheets, I also have a calendar where I write down all my fixed expenses on their corresponding due dates. This allows me to look and see exactly which expenses are due on a particular week so I can ensure the money is available to cover those expenses.

Good luck with your budget! I am no expert in this area, but I just wanted to share what is working for me!

Our next step will talk about different ways to save money and make your income stretch a little further!

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