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Last Updated on October 19, 2021 by Marie Bautista
Do you want to start saving money, but don’t know where to begin?
You’re not alone. It can be tough to get started when it comes to budgeting.
But the truth is that budgets are meant for everyone and anyone who wants them. They help us keep track of our spending so we can see what areas need work and which ones are doing well.
And they also give us a clear picture of how much money we have left over at the end of each month!
That means more cash in your pocket for fun things like vacations, dinners out with friends, or even just some extra savings for emergencies down the road.
If you’re ready to make an ideal budget that works for you, then this guide is for you.
We will show you exactly how it’s done step by step!
We’ll walk through everything from creating a plan up until sticking with it long term – no matter what life throws at you along the way! So let’s get started today on making your dream budget come true!
What is an ideal budget?
While the term “budget” might have a negative connotation, it doesn’t need to!
An ideal budget works for your life and helps you achieve all of your biggest financial goals. There are many ways to go about creating this budget, but most people find that splitting things into smaller chunks makes it easier.
So let’s start with breaking down your goals into manageable chunks!
How to break it down for yourself
When you’re first starting, create a plan that will help you make better financial decisions in the future.
It might seem overwhelming at first, but once you start taking steps towards building this ideal budget – even if they don’t always work out – you’ll be surprised at how much more secure and confident you feel! I know it may seem like a lot of work, but trust me – the benefits will make it all worth your while
Here are some helpful questions to ask yourself when breaking down your ideal budget:
- What does financial security mean to me?
- Do I want to be able to buy more luxury items in the future, or do I value saving money above all else?
- What are my biggest financial goals and how will creating a budget help me achieve them?
- How much do I spend every month on different expenses?
- What is my income level?
- How much can I save for myself monthly without too many sacrifices?
- Is there anything that I just don’t mind spending extra money on because it’s worth the cost to me, like eating out or travel/vacations?
- Do I want to make payments toward any long-term goals, like retirement or bills (e.g. car loan)?
- What parts of the budget do I want to control?
- How much money can I realistically save each month?
- What is my monthly income level and how does this affect my spending habits?
- Are there any bills that will be due soon in the future and what are the consequences if they aren’t paid by a certain date?
- How often do I tend to make purchases, like going out or buying clothes?
- How much do I spend on groceries and household items?
- What types of expenses might be unexpected, like a car repair or medical bill?
- How can I avoid racking up debt and feeling stressed out about money ? If you need help solving your debt woes, learn more here.
Once you’ve developed a plan that works for your needs, stick to it long-term. It might take some time to get used to the new changes in terms of how much you spend or save each month, but eventually, this budget will become second nature!
How to create a plan
Now that we’ve done all the prep work, let’s talk about how to create an ideal budget.
First off, you need to have a goal in mind.
This can be anything from “I want to quit my job” or “I want to get out of debt”.
Once you know what you’re working towards, it’ll be simpler for you to find resources in your life that will help you meet these goals in addition to creating a realistic budget.
Next, break down your monthly expenses into categories (like housing and food).
By doing this, you’ll be able to easily see where the majority of your money is going and where it isn’t.
Remember that regardless of whether or not you’re making enough money, you should still be able to save some money every month.
Finally, once your budget is laid out in front of you – stick with it!
While everyone understands that life has its ups and downs, the only way for a budget to work is if it’s something that can be maintained over time. So make sure that any expenses or financial goals you have are realistic.
How long should I stick with my plan?
If your ideal budget isn’t working out the way you wanted it to, then there are ways to fix that. For example, if you find yourself overspending on certain items then it might be time to cut that out of your budget.
You can do this by simply not including it in the future, or maybe attempting a swap where you spend less money on something else so you have more room for what’s important to you!
The bottom line is: there are almost always ways around problem areas if you look hard enough – so if you truly believe in the importance of an ideal budget, then there should be nothing holding you back from making it work for your life.
Why create an ideal budget?
At the end of the day, a budget is just a way to help you get your finances in order. And while it might not be easy at first, an ideal budget will provide many benefits down the line!
For example, you’ll have more peace of mind knowing that you’ve got everything under control and are on track for achieving your goals.
You’ll be able to make smarter choices about how you spend and save money, which will help you meet life’s unexpected expenses down the road.
And most importantly: You can feel more proud of yourself for making smart financial decisions that are helping you achieve all of your biggest dreams!
Tips for sticking with the plan
- know what your goals are before you start creating a plan!
- If you think that your ideal budget might not be realistic, then it’s time to reevaluate what financial security means for you.
- create your budget tailored to your needs
- stay organized by printing out an excel spreadsheet or writing on your notebook or using an app
- keep some form of currency with you at all times to avoid impulse purchases
- have the right mindset for sticking with your budget
- set aside time each week to go over your plan and divide it into manageable tasks
- always have a plan for your money if you can’t pay directly from your account
- create bank alerts so you never overdraft again!
- Set aside one day out of the week where you pay all bills that are due that weekday if possible.
- When shopping, take cash instead of credit cards – try not to spend more than $30-$40 at one go unless necessary.
- Stick with no less than 10% savings per month by putting money in a savings account or investing in stocks or mutual funds.
- Open a checking and savings account – do not keep cash in your wallet.
- Keep expenses to the minimum; avoid unnecessary spending on luxuries or entertainment.
- Make sure you have some set aside for emergencies such as sudden health issues, medical bills, etc.
- Keep track of everything by using budgeting apps.
- Set up a calendar alert for when bills are due, and keep track of all the money you’re spending each day by using budgeting apps.
- Make use of cashback or points programs whenever possible; this is an easy way to save some extra money on both big and small purchases! And don’t forget about your credit score – it’s important to make sure that you are paying your bills on time every month.
Things You Should Not Be Doing When Creating Your Ideal Budget
Lack of a plan: It is very difficult to maintain a budget without a plan. You should always have a clear goal in mind for what you’re trying to achieve through your budget. For instance, do you want to save money? Or are you looking to spend less on groceries?
Categorizing expenses incorrectly: If the way that you organize your budget does not match up with your actual expenses then it will be challenging to stick with it. Make sure that all of your costs are properly categorized so that they are easy to find, this includes work-related items, student loan repayments, etc.
Living paycheck-to-paycheck: This is one of the most common challenges people face when they are working to get their finances in order. You can avoid living paycheck-to-paycheck by creating a plan that accounts for upcoming bills and expenses while also allocating enough money towards savings so that you’re not playing catch up every month.
Neglecting your long-term goals: You should always keep in mind that the best budget plan is one that lasts for a while. Think about what you want to accomplish through your budget and how it will affect both your short-term life as well as longer goal planning (such as retirement, etc.)
Failing to make changes when necessary: There will likely be some months when you go over-budget or come up short. If this happens then you should make sure to adjust your plan accordingly, making changes as necessary to better fit your needs and ensure that you can stick with it long term.
Lack of knowledge: Developing a budget can be difficult if you don’t know how to break things down into manageable chunks. Make sure that you go over the different features of the app or Excel spreadsheet that you’re using as well as any other steps that are outlined in this article so that you have a clear understanding of what to do.
Possessing an inaccurate idea of your finances: It can be hard to create a good budget without being fully aware of what you’re earning, saving, and spending – especially if you have a complicated situation with loans or other debts. Do some research on your earnings and your spending habits so that you have a good idea of how much money is coming in and going out each month.
Sticking to a budget that doesn’t work for you: There are many different ways to organize your money, and if the way that you’re doing it isn’t right for your circumstances then it might not be as effective. Make sure that everything is categorized correctly so that each expense has its own place within your budget without overlap or confusion.
Unrealistic expectations: Many people set themselves up for failure when they try to make their first budget. Don’t expect perfection right away; instead, focus on creating a plan and then making small changes as needed (such as switching from an Excel spreadsheet to a mobile app).
Trying to do too much at once: If you’re trying to make a budget, save money for retirement, pay off debt, and get out of the red all at once you’ll likely be overwhelmed. Start small by focusing on creating a plan that works for your current lifestyle from this point forward.
Not setting specific goals: You should always have a clear vision in mind when you’re making any kind of plan. Whether it’s a long-term goal or something that will affect your budgeting this month, make sure to have specific objectives in mind so you can track your progress and know what to expect from yourself.
Making unrealistic assumptions: Some people assume they’ll be able to save money through their budget without actually planning out how much they want to set aside each month. You should always set aside a specific amount of money for savings before you start taking care of your other expenses to ensure that you’re staying on track.
Being unaware of how it works: Make sure that you fully understand what the plan is and how it will affect your life in order to make an effective budget, otherwise, .you might find yourself confused and overwhelmed.
Failing to track your progress: You should always keep track of where you’re at so that you know whether or not things are going as planned. Track each expense and any other changes in spending habits throughout the month so that you can make necessary adjustments if needed!
Not checking for errors: It’s easy for something to get lost in the shuffle or for you to make a mistake along the way. A good idea is to always check everything.
Lack of flexibility: It’s important that every budget has some room for adjustment here and there depending on what comes up each month. If you’re working with a tight budget, make sure to take time each month to ensure that it’s helping you stay on track rather than holding you back.
Neglecting the long-term: There are some things in life (like buying a house or paying for college) where having an effective budget will be crucial over the course of months or even years. You should always have a long-term plan in mind when making any kind of budget, even if you’re focusing more on the short term!
Forgetting about unexpected expenses: Life is all about change and it doesn’t make sense to get caught off guard by an unforeseen expense. Keep some money set aside for emergencies so that you don’t have to worry about finding extra money each month just for your expenses.
Being unwilling to experiment: Try out a few different methods of budgeting and see what works best for you! What worked last year might not work as well this time around, so don’t be afraid to try something new if the old method isn’t working anymore. Trying new things can help you discover your strengths and weaknesses when it comes to budgeting.
Being unwilling to take risks: Don’t be afraid of trying out new methods or ideas on how to make a budget that works for you! It’s easy to get stuck in the same old routine, but if something isn’t working then why would you want your budget to stay the same?
Being unwilling to save or pay off debt: There are always things you can do to save money and get rid of your debts, so don’t be afraid to take steps towards improving your financial health. The sooner you start planning out how you’ll improve yourself financially the better!
Not thinking about taxes: If you’re planning out your budget for the next year, make sure to think about potential taxes that might come up. If you keep track of how much money is coming in and going out throughout the year then it should be easy enough to adjust accordingly if needed!
Forgetting what it’s all for: Keeping a budget can seem like an overwhelming task at times, but it’s important to remember why you’re doing all of this work. Your budget should always be helping you achieve the goals that are most important to you!
Having too many items: If your budget is way too long or complicated then no one will want to read through it. Make sure each item stays concise and easy-to-understand so that you know your budget will be effective and useful!
Not using a variety of methods: A good budgeting plan should cover all aspects of income, savings, and expenses. Don’t leave any aspect out because it might come back to haunt you later on. Using different techniques can help make sure that nothing falls through the cracks!
Being unwilling to ask for help: If you don’t know what you’re doing then it can be a good idea to talk with someone who has experience. Sometimes all you need is a little help from your friends and family to make sure that everything runs smoothly, so don’t be afraid of asking for assistance if needed!
Being unwilling to take responsibility: Part of any budget is accepting the consequences if things don’t go as planned. If you know that something isn’t going to work then there’s no sense in forcing it and putting yourself at risk for serious financial problems!
Not thinking about long-term goals: Some expenses might seem small but can actually have a huge impact on your long-term goals. Whether you’re saving up for retirement or just trying to get rid of some consumer debt, you should always be thinking about the benefits that come with building up an effective budget!
Being unwilling to cut back: If there are things in your life (like eating out too often) where cutting down would make a big difference then you should consider doing it. It’s always better to get rid of things that aren’t worth the money and replace them with more meaningful experiences!
Not thinking about what your budget can realistically do: A good budget is one where there are no surprises and everything fits together nicely. If you’re not sure how something works or you think the numbers will add up, then it might be time to find something different.
Being unwilling to give yourself credit: Everyone makes mistakes when they’re trying to create a budget that works for them so don’t beat yourself up if anything goes wrong along the way! You can always learn from past experiences and try again with a better plan.
Focusing too much on the future: If you’re not paying attention to what’s going on right now then it can be easy to get overwhelmed. There are always things that need your immediate attention so don’t forget about them just because they’re not in the future!
Forgetting why you decided to make a budget in the first place: Your budget should always be supporting you in your goals. If it’s not then there might be some changes that need to happen! Knowing why you’re doing all of this work is what will help keep things moving forward.
Being unwilling to accept change: A good budget shouldn’t just cover the basics; it needs to evolve over time as well. You should always be willing to make changes if they’re needed and you shouldn’t fight against necessary adjustments.
Not thinking about the long-term effects: If your budget is too short-term focused then it can cause problems later on down the road. It’s important to remember that everything has an impact, so sacrificing today for safety or convenience could cause you to lose out on something more important tomorrow.
Forgetting to have fun: It can be easy to get lost in the details of budgeting but that doesn’t mean it has to be boring! You should always leave some room for enjoyment and making sure that your budget is supporting those activities as well.
Trying to make everyone else happy: It’s great if you have people in your life who are supportive and willing to help but don’t let them take over or force their ideas into what should be yours. A good budget needs to fit with the lifestyle you’re trying to build and not someone else’s!
Remember that your budget is all about you – so don’t be afraid to get creative with it! If there’s something important enough for you to stick with an ideal budget for weeks or even months on end, then do what feels right and make sure to prioritize how much money goes towards those things.