Budget, now that’s a word we’ve all used at some point. Some of us have a budget that we actually take the time to create each month and others of us use the words “I’m on a budget” to ward off requests for us to spend our money in ways that we don’t want to or can’t. 



Me: “Sorry, I can’t, I’m on a budget”




We all get the general concept and usefulness of budgets but some of us might not realize just how important they are to our financial success. No matter if you make $20K each year or $100K each month, having a budget is essential. You should stay in control of your money and be clear on what money you’re bringing in and exactly how you’re spending it. Having a clear picture on the flow of your money helps you make informed decisions: from how many coffee breaks you should take to what kind of vacation you’ll be able to take this year. 


Some people will say, “I know how I spend my money, I don’t need to create a budget.” You’ll be surprised how many miscellaneous purchases slip through the cracks and add up to large expenses that could be saved or spent more intentionally. 


If you’ve never prepared a budget before, don’t worry, it’s not a difficult process. By the time you’re done you may even feel more liberated, seeing your finances detailed on paper. Even if you find yourself in the negative, with a budget, you’ll be able to more clearly identify your next course of action.





You can even take advantage of personal budget templates available on platforms you’re probably already using, such as Google Sheets and Apple’s Numbers. All you’ll have to do is fill in the missing pieces. You’ll have the flexibility to customize the budget to reflect your financial picture. Following are some things you should be sure to include in your budget creating process.




Include all of your expenses. An expense is any money you pay out. There are two types of expenses: variable and fixed. Variable expenses are costs that change in respect to how much of that service or product you use. An example of a variable expense in your budget may be yoga classes. On the other hand, fixed expenses are costs that stay the same from month to month. An example of a fixed expense would be your rent or mortgage.



Include savings in your budget planning. If you want to change your financial situation, pay yourself. Determine your savings goals and commit to saving each month. Make it real by building it into your budget. Don’t say you can’t afford to save. You actually can’t afford not to. Did you know, according to the Federal Reserve, 40% of Americans can’t cover a $400 emergency. To get started, save what you can, no amount is too little. Set an amount and it to your budget. Increase the amount when the opportunity comes.


Important Dates

Make note of bill due dates and paydays. Staying abreast of these important dates will help you avoid paying bills late and incurring additional charges and stress.



Income is an important part of your budget. Be sure to include all of your income sources and when they are expected throughout the month. You’ll want to ensure you have enough to cover your monthly expenses and in the event you don’t, knowing your total income and expenses will help you identify how much you will need to reduce variable expenses or how much additional income you’ll look to secure.



This final item is a step to include in your process. Review your budget each month and make adjustments where you can. If you find that you are consistently underspending in a particular category you may want to lower the budgeted amount and use those funds for savings or to tackle debt. You should decide the best approach for you based on what your short term and long term financial goals are.


Budgets are essential to getting business done, whether running a household or a large company. Budgeting is an ongoing process, and it becomes easier with time. As you get in the habit of tracking your spending and earnings, you’ll become more aware of your finances and how day to day activities align with your short term and long term goals. Most things are a lot more bearable when you can manage them instead of letting them manage you. That means having a plan for your money.