Starting to budget is not an overly complicated process, but it can seem a bit intimidating if you haven’t done it before.  Maybe you are scared to see how much you spend every month, or think it will be too hard to get organized.  Don’t worry!  Just take it one step at a time, one month at a time.

Successful budgeting is a process that is constantly evolving with your lifestyle and goals.  It will take at least 3-6 months before you really get the hang of it, and get to know your spending habits more intimately to become very efficient with your budgeting.

If you haven’t read my post on why you should be using a Zero-Based budget, start here and then come back to this to get started.

I remember when I decided it was the day I was finally going to organize all my stuff and put together a budget.  I was overwhelmed, scared and anxious about the process.  I figured it would take me an entire weekend to accomplish it.  Once I got started though, it only took me about 3 hours to get every single thing organized to begin putting my budget together.

If you haven’t organized your financial life yet, don’t worry!  Just start here, and I can help you make sense of all the chaos.

If you are already organized then let’s get started!

Get the FREE Basic Budget Setup Forms to fill out your budget step-by-step!  Gain access to these forms and our resource library by signing up below!

For a Zero-Based Budget, it is a very simple equation:

Income minus Expenses equals Zero.

Pin this for later to remind you to get started!

Step 1:  Get a piece of paper and write “Income” at the top.

The first thing you should do is write down all your income.  This includes your full-time job, part-time job, child support, etc.  Basically, anything that is bringing in money throughout the month qualifies as income.  Write it all down.

Step 2:  Get a piece of paper and write “Expenses” at the top.

The second part of the equation typically starts out simple and gets more complicated as you get more experience.  You need to figure out what your expenses are.

Basic expenses:

Home (mortgage/rent), food, clothing, transportation (gas), toiletries, child care, utilities, phone, internet, cable.

These are your “simple” expenses when you are first starting out budgeting.  You should be able to look back at 1-3 months of checking account transactions and see on average how much food, clothing, gas, utilities are costing you to “ballpark” what to budget for the next month.

Seasonal/Annual/Irregular expenses:

Christmas/birthdays/gifts, insurance premiums (quarterly/annual), water/sewer bills, annual pet care.

These are predictable expenses that you know are coming, but oftentimes forget to budget for.  You know Christmas and birthdays happen every year.  Instead of scrambling every December to get the money together for Christmas, plan for it now!  This same thing applies to insurance premiums, sewer bills, oil changes and even your pet’s veterinary expenses.

Unexpected expenses:

Medical bills due to illness or accidents, home repairs due to Mother Nature or an unforeseen pet/kid emergency.

This is where your emergency fund will step in to relieve the stress of these unpredictables.

Write down all expenses you think you will incur over the next month.  The longer you budget the more you will be able to plan for, and this will take the “surprises” out of your spending.  After I had been budgeting for an entire year, I was able to look back and pull out things that were irregular expenses to better plan for them.

Step 3:  Get another piece of paper and write “Budget” at the top

At the top right, put down the total income for the month.

Now divide the paper into three columns labeled (from left to right) “Expense,” “Budgeted,” “Spent.”  Then start filling it in (you won’t be able to fill in the “spent” column until the end of the month).

Example:

At the very bottom, you should have a place for Total income minus Total Expenses, and that HAS to equal zero.  If you have dollars that are unaccounted for, give them an assignment!  Put them into savings, giving or put them toward debt.  There should be no money leftover at the end of the month.

Step 4: Keep track of your budget all month.

I STRONGLY recommend you keep a handwritten budget until you become more proficient at it.  If you use an online app right away, you will likely ignore it, and end up overspending.

Use the FREE Basic Budget Setup Forms to easily start your budget!  Gain instant access by signing up below!

To keep track of your budget all month here is what you should do:

• Weekly (pick one day a week to “check-in” with your budget), sit down and write down every transaction in order.
  • I write the date, transaction, amount spent and the category it goes into.
  • At the bottom of one of those papers I’m using to track, I block off a section to track how much I’m spending in each category and I check off the transactions as I add them into the total.

Here is a visual of what I do:

By tracking your budget weekly, it will help you build the habit quicker versus just doing it once or twice a month.  You will also be able to see exactly where you are with your spending to make sure you don’t go over-budget.

• At the end of the month, take all of your totals and fill them in on your budget sheet in the “Spent” column.  Add up the total and see where you end up.

If you are an overachiever, you will be right on budget.  If you are normal, like I was, you will likely be slightly over-budget.

In my first few months of budgeting, I made sure I had an extra $100 in my account that I didn’t include in my budget to give myself a bit of a buffer while I was figuring out how to budget effectively.

As you become more proficient at budgeting you can upgrade your paper system to the app of your choice.  I am completely old school and I still use a handwritten budget going on three years now.

Starting a Zero-Based Budget doesn’t have to be rocket science.  It is such a simple way to budget.  Honestly, the hardest part is just getting your stuff organized to know how much you should budget for what each month.  The only way to figure this out is to just start.  Just start!  It isn’t going to be perfect, but that’s okay!  Give yourself 3-6 months to really get into budgeting well.  It will get easier every month, but you have to start doing it today to get better at it.

If you are feeling more advanced, check out the Monthly Budget Forms I use every single month for my budget.  These forms are FREE!  Just sign up below to get started!

Try it today and let me know how it goes!