UnBankingUnBelievable

This is a guest post from No Debt Plan, a get out of debt blog.

Today is Budget Makeover Day at Northwest Georgia Credit Union.

What goes into a budget? What will the end result look like? Here are some pointers on what to expect out of any budget.

Budgeting in 3 Easy Steps

If you are reading this and have no experience with a budget you may think it an impossible task. There are so many numbers, and so many variables to consider… why even try?

I won’t get into the why you should have a budget today. But the process of budgeting doesn’t have to be that difficult. There are three main parts.

1. Monthly income

You must first know how much monthly income you can expect. For those of you that get paid by the hour you should use a number that is based on a reasonable expectation of what you will earn each month. In other words basing your budget on a certain amount of overtime is usually unwise. It may be better to even underestimate a little bit on the income number — any amount over that is just extra money in the budget that month.

For those of you working a salaried position, congratulations. Your income planning should be very straightforward.

2. Total monthly expenses

This is the most critical section of a budget. If you underestimate your expenses your budget is shot to pieces before you even really start.

In my family we try to anticipate most of the expenses that come our way. For the consistent monthly expenses like groceries and utilities this is fairly easy as these items are on our minds each month.

But don’t stop there! You must also consider those random expenses that you know will appear sometime during the year, but you just aren’t sure when. Things like car maintenance, renewing your car tags, doctor office visits, and home repairs are all bound to happen during the year.

Plan for these as best you can by taking an educated guess at how much money you might spend this year in each category. Whatever the total is, just divide by twelve. For example if you think you will spend $200 at the doctor this year, that is $16.67 per month.

3. Whatever is left

The third and final section can be the easiest, yet also the most difficult, part of the budgeting process.

You know your income, and you know your expenses. The “what’s left” portion is simple math. Subtract your expenses from your income.

If you have a positive number — congratulations, this is money that can be put towards various saving and debt-reduction goals.

The problem is deciding on which saving goals to fund first! An emergency fund should likely be first, but once you have that… then what? Pay down debt? Save for the kids’ college education? Start setting aside money for that vacation you have planned next year? All of these are fine goals — but the decision is up to you.

Get Started Today!

Is budgeting difficult? It can be, but only if you put barriers in your own way and don’t stick to it on a monthly basis.

Once your budget is setup and is part of your monthly financial habits it is a pretty simple process.