The RIGHT WAY to Budget Your Money [2020]

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Do NOT go ANYWHERE. Grab a piece of paper and a pen/pencil so you can take some notes. It’s time to create a budget for 2020.

Budgeting for Beginners 2019 | Save Money with EveryDollar Funds! https://youtu.be/qIx4Q1Icmvg

Before you can create a budget, you MUST make a commitment to create a budget and stick to it no matter what happens.

Your budget must be realistic, which means it has to be based on reality and somewhat framed around how you NATURALLY spend money each month. To do this, you MIST understand where you are currently spending money.

1. Take a look at your credit card and/or bank account statements
2. Itemize your spending for the past 30-60 days

The above isn’t easy and takes some time, but it is critical to creating a REALISTIC budget. After you have done this, you need to complete a WANTS VS. NEEDS Analysis. This requires you to break down you current spending habits into WANTS vs. NEEDS to understand and PRIORITIZE your spending categories. A NEED is something that you NEED to spend money on, such as your housing payment, utility bills for gas/electric/water, groceries and insurance that protects your family. A WANT is simply that: something you WANT to spend money on and is not REQUIRED to support you or your family.

After you complete the WANTS vs. NEEDS analysis, you need to itemize your income sources based on the net pay which is the amount(s) that are direct deposited every month into your bank account. This is important because your budget needs to be a zero-based budget which means you use up every penny of your income with your total expenses, including expense categories such as savings or debt payoff.

Once you have your income totaled up you are ready to build your budget for 2020:

1. Itemize ALL of your NEEDS expenses
2. WANTS expenses

Once you do this you will find yourself in 1 of 3 different scenarios:

1. Over budget
2. Under budget
3. Exactly on Budget

If you are under budget, that’s great! You can increase either your savings or your debt payoff categories depending on what your top priority is right now. If you are over budget then it is time to start cutting expenses and you should start with your WANTS as opposed to your NEEDS. This is why the WANTS vs. NEEDS analysis was important. It made this part of the budget creation process easier. Hopefully, you can balance your budget by adjusting your wants without having to adjust NEEDS as that is much more difficult and painful to do.If after adjusting your needs you still are over budget then you will need to find a way to earn additional income to balance the budget.

HOW TO TRACK YOUR BUDGET

1. Do it manually

You can certainly track your budget with pen/paper but it takes a little more effort.

2. With Microsoft Excel

This is a great option you can use to track your budget and you can often import transactions into Excel from your company’s website.

3. Use a Budgeting app on your smartphone

This is the option we have used in the past. The app we have used is EveryDollar which works well but there are other apps as well like YNAB or Mint.

What is important is that you choose a method of tracking your budget that you can stick with consistently.

Видео The RIGHT WAY to Budget Your Money [2020] канала The Average Joe Investor