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create a budget

Why The Need to Create a Budget?

The need to create a budget is greater than you can imagine! A household budget is a wonderful and I would say necessary tool to have in order gain insight as to money that comes in as well as money that goes out.  Let’s face it, we all work hard to earn a good living.  We need to be more aware of our spending, savings, etc. 

What Happens if We Don’t Track Our Spending? 

Before we look into what a household budget can do, let’s take a moment or so to consider what happens if we don’t create a budget track spending – in a nutshell, you’re flying blind.  If we don’t track our spending, what can eventually happen is you’ll end up with a bank account that is in the red (negative balance).  This is especially a problem because banks charge you an overdraft fee for each transaction that you make after your account goes negative.

I have learned this the hard way, unfortunately.  I found myself checking our account one morning only to find that our checking was -$350.32.  Admittedly, I freaked out a bit and I started looking at transactions – the majority of this negative amount was from bank overdraft fees.  Anything drafted after the account went negative generated almost $40 in overdraft charges for each transaction.  For example, the coffee that was purchased was not $4.00…it was $44.00 – charge #1.  The gas that was purchased after the coffee was not $20.00…it was $60.00, charge #2, etc.  Needless to say, I was pretty upset with myself for a while.  That’s some expensive coffee!

Creating a household budget allows you to have more control, more insight as to what comes in and what goes out.  This gives you the opportunity to decide what to do with any excess dollars you have after taking care of priority items. But, the only way this will work is if you physically sit down for a little while during the week and review spending.

A Budget Tracks Where Your Money Is Going

I admit that I had a hard time trying to figure out why some do not like the dreaded “B” word.  Creating a budget at its simplest is a tool to help track your spending.  Thinking back, I didn’t like a budget either.  I thought that it was limiting my spending back in my “you can’t tell me what to do” phase.

Nowadays, a budget is my ally.  Creating a budget helps to keep me financially in check and by the end of the month I am better off financially for it.  My overall goals are 1) saving money, 2) paying down debt and 3) have some left over so we can afford a much needed family vacation. But, these goals can only be met if I balance the budget.

Creating a Budget Helps You Identify Where Money is Wasted

I love having the numbers in front of me.  Seeing it helps to identify if I’m wasting money and what I’m wasting it on.  It helps me decide if I really need or even want that magazine subscription – I mean, am I really reading them?  If not, then it truly is a waste. It also makes me reevaluate if I need all those features on my $100 a month cell phone plan. 

Going through these expenses tends to be a humbling experience for me.  But, I look at it as a wonderful opportunity to see how I really want to spend my paycheck.

How Do I Get Started?

When I decided to create a budget, I went straight for the jugular.  At the time, I didn’t have much of a choice – I was attempting to do some serious financial damage control.  I logged into my bank account and printed off three months-worth of statements.  I grabbed a few highlighters and I sat down and highlighted in yellow every obligatory item.  Then I highlighted every discretionary item in blue.  You could say that I was upset, appalled and, admittedly, ashamed to a point.

But, pushing the shame aside, how do I fix this? Simply start with a very simple budget planner.


You can start by:

  • Determine your income (take home pay, after taxes) – How much actual money are you bringing home? Compile all sources of income.
  • Determine your expenses (what did you spend?) – rent/mortgage, utilities, credit cards, etc.
  • Identify your fixed expenditures and your flexible expenditures – food, entertainment, etc.
  • Do the math – calculate what you’ve brought home vs what you’ve spent.
  • Set goals – what do you want to accomplish financially? Do you want to create a rainy day fund (highly recommended by most experts, by the way)? Do you want to set aside money for a down payment on a house? etc
  • Ask yourself, “What do I value most?” – having “stuff” for the sake of having more stuff vs saving for a home or a nice family vacation.
  • Paying yourself first – this way you can ensure that whatever your saving for does not fall by the wayside.
  • Check back on your progress – don’t just set it and forget it 🙂 Make a good habit of checking your spending often.

Well, here we are! Do you think that you’re ready to create your own budget for 2020? The new year is right around the corner and it is not too late to finish writing your resolutions. Let one of your resolutions be getting a better handle on your hard-earned money and you can start by clicking here to get my free budget tracking sheets.

create a budget