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How to Build a Budget


Building a budget can seem intimidating. Not from the aspect of information overload, but rather fear of truly understanding your financial situation. Many of us continue going about our lives without looking into where our money is going. Don’t let this be you.


The importance of constructing a budget one cannot state strongly enough. By taking the time to put together a plan, you can narrow your spending and stop unnecessary expenditures, such as a monthly membership you no longer utilize. If you find yourself struggling, you've come to the right place.


List Every Expense

First, you'll begin by listing every expense you currently have. You can do this on a sheet of notebook paper or Excel, whichever you find most comfortable.

Expenses include mortgage payments or rent, all living expenses such as food and gas, all debt payments, and other recurring payments you have throughout the month. Below is a list you can use to spark your memory.

- Rent/Mortgage payment

- Utilities (i.e., gas, electric, water)

- Cell phone

- Grocery

- Gas

- Debt payments (i.e., car payment, insurance, credit card, student loans)

- Memberships (i.e., gym, monthly box subscriptions, Netflix)

Warning, initial shock may set in, and you'll begin to realize your financial situation. As mentioned, it’s easy to get lost in day-to-day spending.


List All Income

Now, you'll want to list all your income. Include your salary from your primary employer, and side hustle or freelance income, along with any reliable or steady stream of income. For many, by listing your income and comparing it with your debts, you'll see very quickly if you need more income or to cut down on your spending.


Remove Unnecessary Expenditures and Maximize Income

Now that you have all incomes and expenses listed, you can begin the fun part. First, you'll want to identify any expenditures you can immediately eliminate that no longer have a purpose. This approach can be the quickest and sometimes most effective way to free up cash flows.


Once you’ve eliminated non-essential expenses, you can see how much debt you have down to the exact dollar. Having those debts laid out will give you the information needed to begin knocking out your debts.


Lastly, you'll look at the income side to determine if you have enough or need more. A few simple ways to boost your income includes having a garage sale, freelance, or work for companies such as Uber. Once your income piece of the puzzle is complete, then you can leave that alone and begin your financial journey.


It's that simple, but you must take the time to compile all your financial data. If not, you'll potentially leave holes in your spending, slowing leaking your hard-earned money. Once you have a budget, you can tweak it month to month, but it will give you the foundation necessary to make better financial decisions in the future.