How To Create A BUDGET You Can ACTUALLY Stick To (pt 2)

welcome back to part 2 of my begin to budget series now I just want to start off by saying if you have not yet watched part 1 I want you to pause this video go down into the description box and click on the link for part 1 and part 1 is all about getting you in the right mindset for the work that we’re going to do the next couple weeks creating your budget if you’re going to begin a budgeting journey of your own it’s imperative that you have a good foundation and understanding of what a budget is and what a budget is not and more importantly why you need a budget yes you need a budget so I want you to go ahead and check out that video there was also some homework with that video where you get a link to go and join my free resource library where you can print out all of the free printables that will be included in this budgeting course I also have a link down below to this same budgeting course in email form so even though we’re here on YouTube if you’re somebody that you know you just learn better by being able to read something slowly instead of watching somebody talk and trying to pay attention to them talk and do what they’re saying you can go ahead down below click on that link and join the email course instead you’ll get the same information and the same printables just in an email format instead of video great so now that we got all of the housekeeping details out of the way who is ready to get started and while Part one was more of me just talking to you trying to motivate you and inspire you that this course is for you today part two is all about taking action we are going to work this whole video and by the end of this video you’re going to have your very own budget I’m so excited for you guys I’ve gotten a lot of good feedback on the first video and I’m really hoping that you’re gonna find this easy to follow along and super actionable you’re going to feel like you know exactly what to do now as always if you have any questions or you’re confused about anything go ahead and drop me a comment down below in the comment box and I will help you the best that I can and I love hearing your feedback on these videos so keep it coming and be sure to subscribe and tap the bell so that you’ll be notified when every new video comes out so like I already mentioned if you did not take the time and print out the budgeting worksheets when you watch video one you’re gonna need to pause this video head over to your computer and print out the worksheets so you can follow along and while you’re up I would also like you to grab your bank statements and your credit card statement now you can just use the most recent month but I really recommend using at least the past three months because we’re going to use these statements to gather up all of your expenses and using at least three months is going to make sure that we’re also capturing any quarterly bills or quarterly expenses so that we’re not leaving those out sometimes those can add up and if you prepare your budget and you don’t think about those you’re going to have quite a surprise in a couple months so go ahead and grab the budgeting worksheets your bank statements your credit card statement and grab a bunch of different colored highlighters while you’re at it if you don’t actually have highlighters any different colored pens would work fine too now the next step is to go to your kitchen table or your desk and clear it off I mean I just want you to go up and go like you see them doing TV all right all right don’t do that find yourself a nice big space where you can spread out and you have a little bit of quiet so you can really focus on the task at hand grab your highlighter and your bank statements and you’re going to go through each statement and you’re going to use a different color to highlight each categories now some of you might not use credit cards for spending and if so then you might not need to bother with your credit card statements but if you’re like most of us and you’re using credit cards for spending throughout the month you absolutely want to be sure that you’re including your credit card statements in this exercise so go ahead and go through for and for example you want to go through and highlight any gas purchases that you make when you’re filling your car up with gas highlight those in pink you want to go ahead and you want to highlight any of your utility bills or your utility payments in orange go ahead and highlight any food purchases that you make in blue any restaurants in green so on and so forth and of course I really don’t care what color to use for which category I just want to give you an example so that you’re very clear on how I want you to do this now once you’ve gone through and you’ve highlighted all of your statements and they look like a pretty rainbow the next step you want to take is transferring all of those expenses to a piece of paper so you can even go ahead and grab a clean sheet of paper for every color that you’ve highlighted and you can write down every food expense that you have made on one piece of paper then you can go ahead and write all of your fuel expenses on another piece of paper all of your utilities Spence’s on another piece of paper and so on and so forth and if you don’t have a hard time being organized you don’t need to use all different types of paper I don’t want you to over complicate this I just want to make sure that we simplify it as much as possible so that you’re not getting confused especially if this is your first exposure to trying to create a budget another option would be to go ahead and create your own spreadsheet again if you’re not somebody that uses spreadsheets often that’s probably just going to over complicate this for you but if you’re a super nerd like I am and you are obsessed with spreadsheets also like I am then it might make more sense for you to just create a spreadsheet you’ll have all your data in one place it can total it for you and then you’d be able to move through this step much more quickly whatever method works best for you that’s what I want you to do once you get all of your expenses you’re going to go ahead and total it for example maybe all of your expenses at the grocery store for the past three months total $1,200 that’s giving you an indication that on average you are spending $400 a month on your grocery bill right so we looked at three months of bank and credit card statements there’s three months in a quarter so if you are going to take a total of $1,200 that you spent for this quarter then you’re going to divide that by three months and that’s going to give you a total of $400 now that’s probably going to vary a little bit each month but we’re just wanting to get a good picture of your finances and your spending and your expenses in this step now I just want to take a moment and address some of the emotional aspects of this exercise now you have just sat down and looked at all of the money you’ve spent in the past three months for some of us especially if you really haven’t paid much attention to the money that you spend or you’ve never sat down and tracked your spending habits this exercise can be emotional taking a good hard look at your spending habits and your finances can be really difficult maybe what you see looking back at you on these pages is decades of financial mistakes maybe you had an unfortunate accident and you simply fell behind and haven’t been able to catch back up maybe you’ve had a shopping addiction and you’ve never really sat down and faced it and looked at these cold hard numbers but in order to be able to make progress and make positive changes in your finances you have to get really honest about what got you here today in this position that you’re in maybe you’re not even in a bad position maybe you just want to learn how to budget so that you can better manage your money if so that is awesome keep up the good work but if you are sitting here frustrated and upset by the way you’ve managed your money up until now it’s time to make some adult decisions today when we are creating your it’s time to forgive yourself for the prior money mistakes you’ve made and it’s time for you to get serious and make the commitment that’s starting today right now you’re going to make some major changes in your life and in your finances like we talked about in part one this process can be very difficult it’s going to take some serious commitment and self-control you need to make a promise to yourself that you are going to give budgeting your very best shot and you are not going to give up in a month when things start to get hard okay so once you have added up and totalled every expense on your sheet of paper and you have divided them by three you now have an estimated monthly total of what you spend in each category so the next step is to go ahead and grab your budgeting sheets and using the numbers you’ve just calculated I want you to fill in each category on your budgeting sheets now you’ll notice on the sheets there is an estimated section and an actual section when we are sitting down to create your budget to create your spending plan ahead of the month remember we’re creating a plan for the money that’s going to come in before the month even begins you’re going to be sure to fill in the estimated section we’re going to save the actual section for when you actually spend that money and then we’re going to compare and see how close your estimates were so for our purposes right now go ahead and fill in the estimated section now when I was creating these sheets I did my best to think of every possible expense category I could but there’s no way I would be able to cover all of them but I was sure to leave enough room so that you are able to cross off and fill in extra categories that you need that aren’t included on the sheet so right now I want you to take a couple minutes and fill in all these categories that are applicable to you also be sure to fill in the month and then you don’t need to worry about the lines at the end of the second budgeting sheet because we’ll get to those a little bit later once you’ve filled in all your expenses be sure to go ahead and grab your calculator in total each section as you work through the sheets next I want you go ahead and fill in the income portion of the budgeting sheet now if you already know your income and there’s zero fluctuations you can skip the estimated column and just mark it right in the actual column but for people like us whose income is variable meaning it fluctuates or it changes every single paycheck I fill in the estimated section that way I’m able to get a clear picture of what I estimate our income and expenses to be for the month and then I’m able to tweak things once I receive our actual income numbers make sure to include any side hustles any disability payments any child support payments you receive any income that’s coming in to your family at all you want to be sure to include in the income area if you remember in part one we talked a lot about a budget giving you control and a budget not being restrictive so here’s where you get to have some fun we are going to work on what is called a zero based budget a zero based budget or zero sum budget you might also hear it called simply means that your income minus your expenses will equal out to zero the reason we’re going to do this type of a budget is also because of what we talked about in part one which is when you leave extra money sitting around in your account more often than not it’s going to end up being spent on something probably unplanned probably something spontaneous because you feel like you have extra money and well I understand that that may not be the case for everybody it still is going to keep you from reaching your financial goals as quickly as you could otherwise so every dollar that we have left we are going to appropriate somewhere remember we talked about giving it a name or giving it a job so you have already included all of your expenses now the next thing we want to focus on is what to do with the rest of the money we have left so right now if you were to take your total income minus your total expenses for the month hopefully you have some money left depending on your income level or how much debt you might have that may not be the case in fact for my husband and I when I would sit down do our budget we were completely upside down we had negative money left every single month if you even watch our budgeting videos now that I post on YouTube each month I’ll link that playlist up here you can check those out I still show negative sometimes so it’s very possible that you’re going to have a negative number and we are going to work through that so I don’t want you to freak out I don’t want you to panic I promise we’re going to figure this all out together that’s the whole point of these videos but right now I’m just speaking to the people that have some extra money I’m going to use very simple numbers right now just for the ease of example say you’re looking at your budgeting sheets and you have income of $1,000 you have monthly expenses of $700 that’s going to leave you with $300 currently in your budget but we don’t want to just leave that $300 there we want to do something with that $300 so it doesn’t get spent unplanned here is where you get to have some fun maybe you want to save for a vacation next year maybe it’s your anniversary and it’s very important to you that you go celebrate on an island here is where you’re going to start budgeting for your vacation so you’re going to start what’s called a sinking fund and that simply means that you are going to apropriate some of your money each month into a fund that you’re going to save for a specific reason so at this time you still have the 300 dollars left you can decide that you are going to take $50 of that 300 and save it and a vacation sinking fund every single month so now you’re going to mark under vacation $50 and we’re going to subtract that now we have two hundred and fifty dollars left so maybe you also are looking to get out of debt much quicker than you are by simply paying your minimums so now you’re going to take two hundred extra dollars and you’re going to put that towards extra debt payments each month so go ahead and take your two hundred dollars away that’s leaving you with 50 more dollars and here is why I’m trying to explain to you that a budget gives you freedom so you can afford many things but you can’t afford all the things you need to put on your big-girl pants and decide what you need to do with this extra fifty dollars you can put it in a savings account you can decide to put that towards debt maybe Christmas is coming up soon and you would like to save that extra fifty dollars each month towards Christmas maybe you would like to increase one of your other expenses that you’ve allocated on your budgeting sheets maybe you’ve given yourself zero dollars towards restaurants and you want to now allocate the $50 each month towards being able to go out to eat once a month so you have the freedom to choose how you’re spending your money but you have to choose you have to choose and you have to plan ahead of time now you can see here from our calculation that we are now left with zero dollars at the end of our month so we’ve taken our income minus all of our expenses and we’re including the extra debt payment the saving for vacation and the extra restaurant money in our expenses now because it’s all the money that we’re spending throughout the month so now when you take the thousand dollars you’re subtracting all of these other amounts and you’re left with zero so that is the zero based budget now what happens when you’re on the flip side like us what happens if you take your income minus your expenses and you’re showing negative two hundred dollars every single month what does that mean what that means is you need to account for 200 dollars somewhere else in your budget so that you can bring that negative 200 up to zero and you’re going to be even you’re going to have a balanced zero based budget now there’s two ways to do that the first way is to increase your income while you’re going through this process especially if you’re paying off debt as you’re budgeting I highly recommend that you attempt to increase your income in some way this could mean starting a side hustle this could mean going to your boss and asking for a raise this could mean picking up some extra overtime or maybe even getting a part-time job on the side there’s many ways to increase your income and while that’s not what this video is about I highly suggest you do some research and work to increase your income while we also work to decrease your expenses so if your incomes going up and your expenses are going down you can see you’re going to have a more balanced budget overall how can we decrease expenses a couple ways a couple ways I’m not going to tell you that you can never ever ever go to Starbucks because I love Starbucks so I want you to be able to still do the things you love while still being able to work towards reaching your financial goals now we’re going to take your budgeting sheets back out and with a new mindset with a mindset of having a negative budget I want you to review each expense do you really need $100 for new clothing every month or do you think you could maybe drop that down to 150 because if you’re being honest with yourself you probably already have a ton of clothes in your closet that you’re not even wearing or maybe you could start selling some of those clothes that you’re not wearing and you can earn extra money to purchase new clothing but while you’re doing that you can drop your clothing expense down each month and only use the money you earn to buy new clothes so right there you can find extra money maybe all of your research in your statements showed you that you were spending $300 out at restaurants each month take a good look at that is that really necessary do you really have to go out and get pizza every single week with your family could you maybe stay home and grab two frozen pizzas at the grocery store instead how much money would that save you each month if you just made that one small change so I want you to be really honest with yourself here because at the end of the day it’s your money it’s your choices and I can’t tell you the right or wrong way to spend your money you have to spend your money based on your values and your priorities so if going out to dinner and getting pizza every single week is actually high on your priority list and high on your list of values maybe that’s the way you your family reconnect every week if that’s super important to you then you should keep that in your budget I suggest either finding a cheaper place to get pizza or finding another category that you can cut so if you’re going out for pizza every single week figure out a way to spend less money at the grocery store I have a whole bunch of resources on my site teaching you how to meal plan teaching you how to save money on groceries I’ll actually link a video up here where I talk all about how to save hundreds of dollars every single month on groceries in fact when my family and I started budgeting we were spending about $800 a month on groceries for a family of four we have been able to cut that down and we only spend four to 450 a month for a whole family that freed up an extra three to four hundred dollars in our budget every single month and guess what we’re not going hungry we’re fine we eat plenty of food so I promise you that there are ways to cut your expenses you have to get honest you have to be willing to make changes and you have to get creative sometimes if you were able to just easily find $200 by going through your expenses then you can adjust those categories accordingly so if you currently have $700 for groceries you can adjust that down to 500 and now when you take another look at your income minus expenses equation it’s going to equal zero you did it you balanced your budget that is how you create a zero based budget now I realize guys that this is a lot easier for me to just sit down and say it it’s a lot harder to sit down and do it and put it into practice but these are the steps you need to take to create your budget each month and the reason it is so important to do this before the month actually begins it’s so that you have time and you’re able to fiddle with these expenses a little bit and you’re able to create this plan maybe you only have to decrease your restaurants some months maybe someones you have plenty of money in your budget but maybe some months you don’t maybe some months you want to pay extra on debt you can create that plan ahead time and then you’ll know how to execute throughout the month you’ll know how to spend your money because you have already created the plan it’s laid out for you every single month so it’s very very important that you do this before the month begins it doesn’t mean you can’t tweak it throughout the month you’re able to make changes in fact I change mine all the time these days I normally do most of our budget on a spreadsheet because it’s so much easier to going to make changes and it will recalculate everything for you automatically I do have my budgeting spreadsheet template for sale in my Etsy shop I’ll leave that link down below and you can check it out but if this is your first time budgeting I highly highly recommend that you do it at least the first couple months on pen and paper it gives you a much better understanding of your money and your budgeting and your spending habits there’s just something about having to write it out each month that really just helps you get a better understanding it especially in the beginning there’s a couple more things I just want to mention before I finish out this video I know this was a long one but when you’re creating your budget it is imperative that you find some money for fun now I know you might be super super tight and have no extra money I don’t care if it’s only five dollars I want you to prioritize some sort of fun or personal money in your budget this is going to help this is going to help you not feel so restricted or deprived again if you’re really in debt and you’re working super hard to get out of debt there’s going to be a lot less extra money I get it I’ve been there I promise you I understand how you feel but hear me if you hear nothing else through this video hear this you have to have some sort of release something to look forward to throughout the month you are going to be sacrificing and giving a lot up in the beginning of this journey but that doesn’t mean you don’t deserve to have some type of enjoyment I don’t care if it’s only five dollars budget five dollars take your kids for donuts on the first day of each month something small it really doesn’t matter what it is I’ll leave it up to you but just a all dollars can make a huge difference especially in the beginning if you’re not operating on a super small budget I suggest you definitely budget in some personal money for you and your partner or your spouse it can be any amount you choose as long as it fits within your budget this is going to allow you to have some freedom to be able to spend that money on what ever you want even is completely extra and unnecessary it’s your personal money it’s in your budget it’s accounted for it’s fine spend it enjoy it guilt-free and doing so is going to help you more rigidly stick to the other guidelines and the other amounts that you have set in your budget one last thing before I leave you for today I want to talk about the bottom sections of the budgeting sheets so we’re looking here on page 2 where it talks about monthly goals this is super important I want you to sit down when you’re doing your budget make sure you’re sitting with your spouse your partner or is talking to an accountability partner about this section now that you’ve done your budget and you have a really good clear picture of your financial situation on a monthly basis I want you to determine what your goals are for this month are you going to start saving for that anniversary vacation like we mentioned are you going to start saving for Christmas like we mentioned are you setting a goal of paying 200 extra dollars on your debt each month I want you to take a couple minutes and clearly fill out that section so when you are having a hard time throughout the month or maybe you’re getting off course pull out your budgeting sheets take a look at what you’ve determined your goals to be for the month and just remember that that is why you are budgeting because you’re working towards these specific goals maybe it’s only one goal maybe you’re working towards one specific goal each month and that is simply to get out of debt you’re going to do every single thing you can and use every dollar you can to push yourself and make progress towards that goal so just remember each month when you’re sitting down and figuring out your budget to take an extra moment or two and write down some specific goals because like we said before just the act of writing down and getting them out into the universe is a great first step now the very last section where it has notes on what worked and what you can improve we’re actually going to do that at the end of each month you’re just going to take a couple minutes check over your budget now don’t forget as the month progresses when your actual expenses come through a fill in the actual space for that category at the end of the month you can go ahead and total all the actual lines and that’s going to give you a really great idea especially in the beginning of your budgeting journey how close your estimates were so maybe you estimating that you’re going to spend $500 on food at the grocery store this month and maybe at the end of the month when you fill in what you’ve actually spent you’ll see that you really only spent $400 now you have an extra hundred dollars at the end of the month that you can throw towards debt so take a look at those goals you just wrote out and use that extra money that’s left over at the end of the month to support those goals keep an eye on these actual columns each month after you’ve been budgeting for three or four months and you see the same trends every single month that’s a great indicator that you can go ahead and adjust your estimated amount for that category so if you see month after month after month you’re not spending near as much on groceries as you had estimated you can just go ahead and change your estimate just go ahead and and make your estimate four hundred dollars instead of seven hundred dollars that way you’ll start getting a much better feel for your spending habits for your budgeting habits and seeing how your estimates pan out each month and over time your estimates are going to become more and more accurate so that is all for video number two I know this was a lot today guys if you’ve hung with me all the way to the end that’s for you I’m so proud of you I’m excited for you if you have any questions please leave them down below don’t forget to subscribe and tap the belt so that you can be notified every time each new video comes out I would love to hear your feedback for this video down in the comment section thank you so much for watching have a great day bye

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