I know, the word budget just makes you want to get up and scream. But, it is a must for people that want to get out of debt or want to save money. Here are a few quick tips on how to start your budget:

1) Figure out your monthly spending. Take a notebook ( I used a small pocket notebook so I could take it with me and not miss anything) for an entire month and write down EVERYTHING you buy or spend money on. This includes your monthly bills. Make sure to only use minimum payments for anything that has monthly payments (get to this later on paying off the debt).

2) Calculate your total monthly earnings and taking home pay. Everything from work to investments that you get paid from monthly.

3) Subtract Step 1 from Step 2. If it is a negative number, then you are spending more money then you make every month and going further into the hole. If it is positive this is a great thing, you will not have to tweak your spending as much.

4) Go down your list and look at the items you spent money on. Find things that are not really a must to live in your every day life. Write beside those items how much you are willing to reduce spending on it every month. If your number in step 3 was negative, keep working your list until you have a positive number.

5) Create your categories of spending. For example: Food $200.00, Gas $200.00, Clothes $50.00, Electric $100.00, ect. What I also like to do for items like food and clothes is put the money in an envelope so I do not over spend. Any money left over in the envelopes I put towards either savings or you can put towards your debt.

6) Make sure to include money for fun activities, living on a budget does not mean you have to cut out all your fun activities, just plan them smarter. You might want to check out our article on 5 cheap and fun date ideas.

7) Budget for debt reduction, put as much money as you can afford into this category, because the more you pay down your debt the lower the monthly payments get and the more you can save for the future. Pick 1 credit card to pay more than the minimum balance every month until it is paid off. See our article on how to pay off your credit cards.

8 ) The goal of a budget is to get out of debt and to save money. Make sure you put in your budget every month an amount that you want to save and put into a savings or ING account. If you have to rework your budget to get at least $50 in savings every month, do so.

9) Put your budget to work for you. Stay within your means that you set for your budget. It is hard to live on a budget for the first few months, but it feels good at the end of every month if you were able to accomplish that task and see money in the debt column go down and money in the savings column go up.

10) At the end of each month you need to make some tweaks to your budget plan. Maybe you over budgeted in some categories and have a lot of money left over or you under budgeted for your utilities and were short money and have to take it from another category in your budget.

11) Continue to do step 10. Your budget will change all the time due to different circumstances, but it will not change too dramatically, unless you hit the lottery or something, in that case, I will take a cut, :)

How do you budget?

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