Budgeting Made Easy

Being organized means being proactive — in every area of your life. This includes your finances. If you’re just drifting along with no real idea of where your money goes, you’re not organized. This easy step-by-step budgeting system will give you peace of mind and more cash in your wallet.

Step 1 — Know What You Want To Accomplish

Checkmark-Iconknow what you hope to accomplish financially before beginning your budget

Xmark-Iconare you trying to pay off your debts? reduce your expenses? save for retirement?

Checkmark-Iconlist your financial goals for the next 6 months, 1 year, 5 years, 10+ years

Xmark-Icondon’t worry about feasibility — where there’s a will, there’s a way

Step 2 — Create The Sheet

Checkmark-Iconstart with a sheet of legal paper — or a spreadsheet program

Xmark-Iconcreate 12 columns, one for each month of the year

Checkmark-Iconlabel each row for a different living expense — groceries, gas, mortgage, etc.

Xmark-Iconthink in terms of categories that you can divide in to subcategories

Checkmark-Iconfor example — “automobile” includes gas, repairs, insurance, registration, etc.

Step 3 — Track Your Expenses

Xmark-Iconfirst objective — create a list of static expenses (items that cost the same every month)

Checkmark-Iconstatic expenses include rent, mortgage, car lease, student loan, etc.

Xmark-Iconsecond objective — evaluate your variable expenses (items that fluctuate every month)

Checkmark-Iconvariable expenses include groceries, utilities, entertainment, clothing, etc.

Xmark-Iconthird objective — go through last year’s bills to find any large and unexpected expenses

Checkmark-Iconunexpected expenses include car repairs, medical bills, fines, etc.

Xmark-Icontally your irregular expenses and divide by 12 for an idea of how these costs spread over a year’s time

Step 4 — Root Out Your Money Leaks

Checkmark-Iconavoid impulsive spending — an organized budget requires proactive rather than reactive behaviors

Xmark-Iconyou want to make conscious decisions about how to invest your resources — think it through first

Checkmark-Iconclear up any financial disorganization that costs you money — interest charges, late fees, etc.

Xmark-Iconpay attention to where your money actually goes — track every single penny you spend for a month

Checkmark-Iconlook at each expense and ask if you get a tangible benefit from it

Xmark-Iconask if that expense is worth the time you have to spend earning the money to pay for it

Checkmark-Iconif the answer to both questions is yes, great!

Xmark-Iconif not, that may be an expense you could let go of without much pain

Step 5 — Clear Up Your Debts

Checkmark-Iconlist out all of the balances you owe on every credit card and loan

Xmark-Iconmake note of the interest rate and APR charged by each

Checkmark-Iconpay the minimum on all of your debts except the one with the highest interest rate

Xmark-Iconpay as much as you can afford to on the highest interest rate account

Checkmark-Iconwhen that debt is paid off, apply the money you were paying to the next-highest rate account

Xmark-Iconkeep working your way down the ladder until all your debts are paid off

Step 6 — Tally Up Your Income

Checkmark-Iconyou can’t create a budget until you know exactly how much you earn — take-home pay

Xmark-Iconcalculate your income after taxes and Social Security are withheld

Checkmark-Iconalso take into account any other company-related withholding — health insurance, 401K, etc.

Xmark-Iconinclude only regular sources of income that you can count on

Checkmark-Iconcompare your monthly income to your monthly expenses to see where you stand

When You’re In The Black…

Xmark-Iconif you are in the black (more income than expenses), begin committing some money to savings

Checkmark-Iconno matter how large or small an amount, savings is a priority

Xmark-Iconbuild your savings and investments into your budget like a bill

Checkmark-Iconpay yourself first before paying anyone else

Xmark-Iconthe goal is to have at least 10% of your income going into savings

When You’re In The Red…

Checkmark-Iconif you are in the red (more expenses than income), your goal is reducing your spending

Xmark-Icondecide which expenses are necessary and which waste money without giving you any tangible benefit

Checkmark-Iconstart first eliminating incidental expenses — sodas, snacks, magazines, Starbucks, etc.

Xmark-Iconalso consider ways to reduce larger expenses — cheaper housing, give up one car, fewer vacations

Checkmark-Icon< 30% of your income should be spent on housing, < 30% on household, and < 30% on other bills

Xmark-Iconis your money isn’t better spent elsewhere? would you get more benefit from other spending patterns?

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Ramona Creel is an award-winning 15-year veteran organizer and member of the National Association Of Professional Organizers. As well as having birthed “The A-To-Z Of Getting Organized,” Ramona is also the author of “The Professional Organizer’s Bible: A Slightly Irreverent And Completely Unorthodox Guide For Turning Clutter Into A Career”—and the creator of more than 200 “quick-start” business tools and templates for use by productivity professionals. She writes seven different blogs, has worked with hundreds of clients, and has delivered scores of presentations on getting organized. Ramona resides on the roads of America as a full-time RVer—living and working in a 29-foot Airstream. Learn more at and RamonaCreel.com.

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