The Comprehensive Guide to Making a Budget

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You just graduated college. You’re maybe in a lot of debt, maybe in a little debt, or maybe no debt at all! Regardless, you probably need a budget if you’re going to stay out of debt and start saving money for your future.

In a nutshell:

  1. Figure out your goals. Are you saving for something? Is there something you will need coming up?
  2. Add up your income that you can count on every month, before overtime, and after taxes. If you rely on tips or commission, look at the past few months if you can, and take the average of that.
  3. Observe your expenses for a month. Or the past month. Print out your statements on all your cards and find categories for what you spend your money on. Include rent, gas, electric, water, internet, payments on loans/cars/whatever, food, personal hygiene, etc.
  4. Allot your money according to your spending habits, and see where you can save. Starting to save now can make a huge difference in your future!

The extended version:

When I got my first real “big girl” job, a lot happened really quickly. I applied, got an interview, found an apartment close by, got the job, signed the lease. All of this happened within, oh, about a week and a half. The apartment alone is $1000/month, not including any utilities. Looking back, the apartment is ridiculously overpriced, but whatever. It is what it is. .Luckily, CJ works about 10-15 hours a week and I work full time with opportunities for overtime. His parents also help us a bit  (we are very fortunate to have them helping while he is finishing his degree).

This seemed like quite a big undertaking, but after the first month or two, I realized that a budget was definitely necessary. The first thing I did was determine my goals. What am I making this money for? What am I going to put it towards? Obviously, my necessary living expenses like rent, utilities, food, and monthly payments. But what else? Once I figured out what I wanted to do with my money, I came up with a budget plan. I looked at countless blogs for budgeting tips, and ultimately came up with my own. Here are a few of my favorites:

The 50/20/30 Budget at The Budget Mama

How to Start a Budget (Part II) at Our Freaking Budget

Best Free Budget Templates & Spreadsheets at Budgets Are Sexy

Does your budget suck? at Making Sense of Cents

I then wrote down all sources of income between myself and CJ. I oftentimes take up a few extra shifts for a nice time and half work day, but don’t count it. All I count is my normal 40 hour work week income. When you break it down, it comes to the following:

Me: $xxxx after taxes – $xxx for insurances/parking permits = $xxxx/month

CJ: $xxx/month

CJ’s parent’s contribution: $xxx/month

Grand total = $xxxx/month

Next, I figured out all of our expenses. For the first month, I decided to just log how much money was coming in and out every day. Here is what I did:

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This wasn’t so much of a budget as a way to observe our spending habits. That month we made a bit less than usual. We spent $326.62 on food (almost $200 on a 45lb bag of protein, though). We also put away money (usually 20% of what we make) in savings after paying bills and everything else. I know it’s a little messy, but you get the point. After observing our habits for a month, it was a lot easier to allocate how much money should go to what.

I made 5 Categories:

  1. Home expenses (Rent, Water, Electric, Internet, Cleaning Supplies, Ant Spray, etc..)
  2. Transportation (Gas)
  3. Daily Living (Groceries, Eating Out, Personal Hygiene Supplies)
  4. Entertainment (Videogames, Vacation/Travel, Sports)
  5. Savings
  6. Debt and payments

Using my spreadsheet from the past month, CJ and I decided where to spend our money together. This is extremely important so that both members of the household are on the same page!! We both are honest and open about our spending.

This is where we allot our money for the upcoming month:

  1. Home expenses – $1200
  2. Transportation – $200
  3. Daily Living – $450
  4. Entertainment – $150
  5. Savings – .20 of my paycheck 
  6. Debt and payments – $100/month

Most months, we take half of what is left over  and also add that to our savings. If we have a big purchase to make (like our brand new gorgeous sectional couch!), we use it.

So there it is. We are doing our very best to stay debt free, and I think we’re on a good financial road! Making a budget can be a daunting task, especially if you have more expenses then we do. It does take quite a bit of patience, but it is so extremely important to be on top of your finances and not start drowning in them.

Good luck to all!

xx

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