This week we are moving on to Part 2 of the Build a Budget Series! Are you super excited?
If you haven’t already be sure to check out Part 1 of the Build a Budget Series here.
Alright, so we have figured out our “why?” Did y’all really do the exercise? If not GO DO IT! It is important that we get clear on the why before we move on.
We are on this journey together so I am going to share my answers:
- What do I want to accomplish by creating this budget? I want to understand where my money is going, and how to apply it more intentionally to the areas that I wish to see change/improvement.
- What changes do I wish to see in the immediate future? Decrease in debt. I want to pay off my tuition for the fall and finance my trip to New Orleans for Essence.
- What are my long term financial goals that having a budget will help me achieve? I want to be debt free, and build wealth. Additionally, I want to be able to send my daughter to college debt free as well.
- What habits am I looking to change? Impulse spending and using a credit card. I want to become intentional with every dollar and make sure I am spending my money on the things that will get me to my end goal.
- Why is this important to me? Debt is stressful, owing people is stressful and I want to live my best life, therefore, paying off debt will release me of the stress of owing anyone! I want to live my best life, travel and enjoy my daughter without having to worry about money.
Once you have really answered these questions we can move on to
Making a List of Expenses.
This list is the basis of your budget, it will be used and referenced many times going forward. In order to build your budget you will be revisiting this list often. This will not be concrete, as we talked about this being a common mistake before here, the budget is an ever evolving document and to be successful revisions will be necessary.
You will need: a few sheets of paper, a pen/pencil, and a highlighter (It will make sense later)
On a sheet of paper make a running list of expenses. This list should include everything, and I mean EVERYTHING that you spend money on weekly, monthly, annually.
A few examples of things that should make the list:
Don’t forget expenses that only take place once a year like your Car Registration. Think about all of the little things that you spend money on and add them to the list, you can remove them later if they don’t apply.
For now, you want to list EVERYTHING. If you buy a pint of Henny every 2nd Wednesday, list that too. (No judgment)
Once that list is done, go through and highlight all the SET EXPENSES, things that are billed monthly on a set date ie. Rent, Utilities, Car Note, etc.
Underline all the variable but necessary expenses. Things like groceries, gas, etc.
Put a ∗ star by each thing that is a non-essential expense.
The list should look something like this:
That is it for Step 2: The List, next week will take this list to the next level and transform it into the foundation of our budget!
Homework for Next Week:
Go down your list and add how much you spend on each item in a month.
I am going to send some exclusive tips on how to complete this step to my email list. Make sure you are subscribed by filling out this form. Make sure you check the box to stay connected.
Until next time…