30 Day Money Challenge – Day 9: Create a Budget
Welcome to day 9 of the 30 Day Money Challenge. Today we are going to do a little math. I know what you are thinking. However, the good news is that doing the math now will help you gain control of your money, and once you accomplish this step, you will be one step closer to achieving your financial goals. So, let’s get started!
Your task today is to create a budget for the month of February.
· Pen & paper, Excel spreadsheet, or a budgeting app (smartphone or computer)
· Your bills and monthly statements
· Checkbook register
First, locate your bills and monthly statements. At the top of your budget, place your total net income – the amount of money you bring home after all taxes and deductions have been withheld.
Next, list all bills and household expenses by category. Don’t be shy about breaking down expenses into subcategories. For example, in the category of food, break down and itemize groceries and eating-out. Be thorough in listing expenses and review bills, bank statements, and your checkbook register for the past few months to be sure you have included all expenses. The number one mistake we see in monthly budgets is that expense categories are underestimated and in some cases, completely missing.
Once you have your expenses listed in your budget add them all and then subtract the total from your total net income. This number should provide you with one of three results: a zero balance, a surplus, or a shortage.
If, after expenses have been subtracted from your net income, your result is a surplus, plug the amount back into a category in your budget, for example, savings (for a specific financial goal) or to reduce a debt or credit card. Remember, you want every dollar to have a job, and for this reason, you want the final result of your budget to be zero.
This result will help you take the next step in taking control of your money. Even if the result is zero or a shortage, you now know the reality of your money situation, and in upcoming tasks, you will be able to explore ways to cure this money problem. You can do it!