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How to Make a Budget

Hello frugal readers! It’s time to talk about that dreaded word…BUDGET. Do you know how to make a budget? Do you have a budget? Do you stick to your budget? This frugal teacher is here to give you a simplified version of how to make a budget for those of you who just aren’t sure where to start.


Budgets are so important. They allow you to set up a plan for your money and to achieve your goals. Want to go on vacation? Put it in your budget. Want to pay off a credit card? Budget for it.


Having a plan for your money will help you feel more in control and reduce your stress. Here are some simple steps you can follow to get started and all you need is a piece of paper and a pencil (and maybe a calculator).




First, list all of your income on one side of a piece of paper. That’s any money you have coming in each month. If you aren’t sure or if your paycheck fluctuates, just look at your last few bank statements and take an average. You need a monthly total for all income. Then on the other side of the piece of paper list all of the things you need to live - the necessities. Dave Ramsey calls these the “Four Walls.” These items must come first in your budget and are your housing, food, utilities, and transportation. Now that you’ve got your paper split in half with income on one side and your necessities on the other side, it’s time to do some simple math. Add up all of your income for one month and write that down. Then subtract your housing costs, grocery money you’ll need for a month, your electric bill, and any costs associated with your vehicle such as any car payments, insurance, and gas. Whatever is leftover at this point is what you have to truly budget each month. That’s where decisions have to be made. What things to keep, what things to cut, and what to do with what’s left. And hopefully there is something left! If there’s not, I strongly recommend you read A Total Money Makeover by Dave Ramsey.


Next, it’s time to list out your bills. These are things you know you have to pay each month like your cell phone, internet, credit card bills, etc. Again, if you’re not sure, print out a bank statement or two and scan them over to see where your money goes each month. If you really want to put a smile on this frugal teacher’s face, grab some highlighters and make color-coded categories so you don’t miss anything. Once all of your monthly bills have been subtracted, it’s time to finish up your budget with categories like savings, vacation fund, or maybe just a category called miscellaneous so you don’t get off track when you get an unexpected bill in the mail. Either way, remember that making a budget doesn’t have to be complicated. It’s okay if it takes you two months (or six) to get your budget just right. It’s going to take some trial and error. If you never start a budget, then you’ll never have a budget. So grab yourself a piece of paper and get started today!



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