A Step By Step Guide To A Successful Budget – Free Bonus Download – Budget Spreadsheet

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Does the word BUDGET make you cringe when you think about it? Sitting down to take a look at your personal or family finances can be a daunting task fraught with anxiety for many. If that is you, there is probably a reason you’ve decided it is time to make a budget. Maybe you need to get your spending under control, you need to find the finances for a new car or get out of debt totally. No matter what the reason, setting up your first budget is the first step to reaching your financial goals. It can also be the first step to financial freedom. Make sure you check out the FREE BONUS I’m offering at the end of this post.

Step No. 1 – You Can Do This. 

Your first step is to realize that you can get control of your finances and successfully reach your financial goals in life. Don’t be intimidated and don’t think you have to be perfect right out of the gate. There will be a chance every month to make adjustments and change your trajectory to assure you will hit the mark. So, be confident that this is something you can do and learn to do well.

The budget I use is the financial equivalent of a calorie-restrictive diet. It’s called a zero-sum budget. I know the word diet is a four-letter word with negative connotations to many, but we use a diet plan when we realize our eating habits need to change so we can reach a goal that is better for our immediate and long term health. And a budget will do the same for your finances. 

When you are on a calorie-restrictive diet, you have a set amount of calories for the day and you make a plan to use those calories over 3 meals and a snack until they are all used up without going over. That helps you control your eating and reach your weight loss goal. The zero-sum budget works in the same way with your finances. Each month you have a set amount of money, your personal or combined household income. And just like that diet, you must make a plan to use all that money over the period of a month to cover your bills and pay down debt and ultimately build savings. Your goal is to have ZERO money left at the end of each month without going over. Every dollar is designated to a budget category until you have no money left. 

Budgeting helps you count financial calories to help you reach your financial goals. Just like you can move calories to different meals during the day to provide needed energy, you can also move money into different categories of your budget to provide a customized financial energy plan for your month. No two months are the same, so you have flexibility each month to move money to different categories and ultimately you will find the budget plan that works for you. You may ask, If I’ve paid all my bills and there is money left over, what happens? The answer is, it has to be used somewhere. It must go into saving or paying down your debt, but it must be used.

Step No. 2 – Put A Name On It. 

Name your goal. This is the same as determining how much weight you need to lose. If you are shooting at nothing, you will be sure to hit it.  So, it is imperative that you name your goal. If you are budgeting for a new car, put the car’s name on it. If your budgeting for debt elimination, you could simply name it Debt Freedom. Whenever you name your goal it keeps it in your conscious and subconscious mind which will help you believe in your plan and guide you to hit the mark.

If you’ve never had to make and stick to a budget before, it may not be easy for you at the start. Especially if you are used to spending money on whatever you want. You’ll begin to understand why I’ve likened it to being on a diet. There will be temptations to break out the wallet and buy something you know will break your budget. Just like blowing your diet with that second piece of chocolate cake. You’ll need something to help you stay on target and putting a name on it will help you reach your goal.

A good way to help you keep your goal before you is to write it down. You can put it on sticky notes or find a picture of that car or vacation resort and place them where you’ll see them. On your bathroom mirror, on your computer monitor or the dashboard of your car and right inside your wallet so you have to look at it before you pull out the cash. As an example Let’s say a married couple, Bob and Susan have credit card debt and they can only make the monthly minimum payment of $125 per month. They know it will take them forever to pay off that debt with that low monthly payment and the interest on that card is eating away at their finances and emotional happiness. Bob and Susan have decided to find $300 in their budget to put toward paying off that debt as soon as they can. They are putting the name DEBT FREE on their goal.

Step No. 3 – Your Income

This is like the total calories you should be consuming in your daily diet. This is the number you have to know to make your budget work. If you don’t know exactly how much money you have coming in every month, you can’t be successful in making a budget. If you have a partner, you need to make sure they are in total agreement with your budget plan. Otherwise, you are just going to be going it alone. Sit down and list all of the AFTER TAX income you have. Your Income from your job. Do you have a side hustle that provides income? What about Alimony payments or child support? Do you receive dividends? It might look something like this example:

Bob and Susan’s Monthly Income

Bob’s Salary $2,800
Bod’s Side Hustle $280
Susan’s Income $1,300
Monthly Annuity $200
Total Monthly Income $4,580

Step No. 4 – A Hard Number. 

Like Bob and Susan, you may have already put a name on your goal and determined your total monthly after-tax income, so now you need to determine how much money it will take to reach that goal. It could be the entire cash price of a car or a monthly payment that you can carve out of your monthly finances, the money for a down payment on a house or maybe you want to find more money to pay down your existing debt more quickly. 

What you need is a hard number. If you want that car, do your homework. Find out where you can get a great deal and check with the bank, dealership or credit union to know exactly what the price is and how much the down payment and monthly payment will be. If you have made the decision to get out of debt and have financial freedom, you’ll need to sit down and calculate the sum of all your current debt and then make a commitment not to commit to any new debt. Then, decide what amount you want to put toward that debt every month.

You cannot be successful unless you know that hard number. In our example, Bob and Susan want to find the money to pay an extra $300 a month on their credit card debt until that debt is paid off.

Step No. 5 – Where The Money Went

Look at your monthly bills. This is like counting all the calories that you truly are consuming in a day. This will allow you to see the health of your finances. If you have more going out than coming in (your total from step #3), you have found the problem with your financial health. You are overspending. Make sure you find every dollar of your spending. Things like banking fees are often missed and can throw off your total monthly spending amount. If you use credit cards you will need to pull out the monthly statements and determine what you are spending money on each month and how much.  Most credit card sites have tools to help you do this online. You can group your expenses into areas like restaurants and bars, gasoline, entertainment, groceries, credit card debt payments (these are the cards you are paying off), Other areas of expense to remember are Debt: Student Loans, Existing Car Payments; Household Items: Toilet Paper, Laundry Detergent, Dishwashing Detergent, Trash Bags, Cleaning Supplies; Transportation:, Taxis, Bus Fare, Train Tickets, Gasoline; Banking: Fees, Etc; Insurance: Home or Renter, Auto, Health. Every Monthly Expense needs to be accounted for. It may look like this example:

Bob and Susan’s Current Monthly Budget

Mortgage $1,200
Water $85
Gas $105
Electricity $185
Groceries $400
Gasoline $200
Credit Card Debt $125
Charitable Gift $200
Cable $115
Cell Phones $105
Insurance (car & home) $300
Internet $90
Child Support $600
Bank Fee $10
Car Payment $300
Restaurants & Bars $350
Gym Membership $50
Subscriptions $40
Beer and Wine $60
Total Monthly Expenses $4,520

Step No. 6 – Cutting Out The Extras

Extras are things that you can live without. Just like the calories from that second piece of chocolate cake will mess up your diet, add inches to your waist and ruin your health over time. The unnecessary extras in your budget are messing up your budget, adding financial debt and could ruin your credit. Believe me, we all have a lot of extras built into our lives. This step is like eliminating calories from your daily diet so you can reach your weight loss goal. This is where you will find the majority of the extra money you need to reach your financial goal for this budget.

Now start thinking about where that money is going to come from. Where are the places that you can cut expenses to put money towards reaching your goal? Here is a list of where you may be able to find some extra cash by cutting back.

Restaurants – Cutting back to eating out once a month or not at all, can save you hundreds of dollars.
Lunches – Instead of buying your lunch at a restaurant every day, try packing your lunch.
Clothing – Maybe you could forgo buying that expensive pair of jeans or shoes opting for something less expensive.
Entertainment – Rent a video from RedBox instead of paying the full price at the theatre.
Cable – Cutting the cable can save you more than a hundred dollars per month. Buy an antenna and connect it to you home’s cable network instead. A one time cost that pays for itself in less than a month.
Internet – Can you save some money on a cheaper internet service?
Subscription Services – Netflix, HBO, SiriusXM Radio, etc.
Salon Visits – Can you wait a little longer between visits? Maybe you and a friend can do each other’s nails.
Alcohol – Cutting back would not only be good for your wallet but your health also.
Gym Membership – If you aren’t using it, cancel it.
Smoking – Cut back or better yet, stop.
Insurance – Even though this is also listed as a necessity, You may also want to reevaluate your policies and may find you can save some money here also.

With a little thought, you may be able to easily find a couple of hundred dollars of savings in your monthly expenditures that will help you reach your goal quickly.  Make your decisions on what to cut back or totally cut out and calculate the money you will save.

Step No. 7 – Building Your Restricted Budget

This is like your financial metabolism. This tells you the bare minimum of calories or dollars your financial metabolism needs each month to survive. Sit down and think about your necessities only. Those are the expenditures that you must make to live. There are a lot of luxuries in our lives that we take for granted that we can live without. If you are serious about reaching your financial goal, you’ll need to cut the things that are not totally necessary to survive. You’ll need to list things like the following that are necessities.

Housing: Mortgage or Rent Payment
Utilities: Electricity, Gas, Water, Garbage Removal
Food: For Home Cooking
Household items: Toilet Paper, Laundry Detergent, Dishwashing Detergent, Trash Bags, Cleaning Supplies
Transportation: Existing Car Payment, Taxis, Bus Fare, Train Tickets, Gasoline
Banking: Fees, Etc.
Insurance: Home or Renter, Auto, Health

Even if you go through all the expenses that you can think of, there will always be something that you will ultimately leave off this list. That is ok and why you will make adjustments to this budget on a monthly basis until you get it fine-tuned.

Bob and Susan’s Restricted Monthly Budget

Mortgage $1,200
Water $85
Gas $105
Electricity $185
Groceries $400
Gasoline $200
Credit Card Debt $125
Charitable Gift $200
Cable $000 Bob put an antenna in the attic for $50
Cell Phones $90 Found a cheaper plan
Insurance (car & home) $300
Internet $50 Found a different plan
Child Support $600
Bank Fee $10
Car Payment $300
Restaurants & Bars $100 Eating more at home
Gym Membership $50
Subscriptions $20 Cut to just one streaming service
Beer and Wine $20 Not drinking so much
Total Monthly Expenses $4,040

Step No. 8 – Meeting Your Budgeting Goal

The pounds are finally starting to come off. At this point, your new budget is set up and working for you and you’re on your way to reaching your financial goal. You should be able to see the fruits of your labor beginning to pay off just like Bob and Susan. Here is how it worked out for them. Their goal was to find $300 dollars a month in their existing budget to put toward paying off credit card debt.

Their old monthly budget total was: $4,520

Their new monthly budget total is: $4,040

Monthly Savings: $480

Bob and Susan found more money than they had originally expected so they now have a choice to make. Remember at the beginning I said this is a ZERO SUM budget and every dollar must be used somewhere? Here is the decision. Bob and Susan can use all $480 dollars they have saved and use it to pay off their credit card debt faster than they anticipated or they can take that extra $180 and put it into a savings account for an emergency fund. Either way, the sum at the end of the month will be zero and they win. If you follow the steps of this budget plan you will win too.


I have designed a spreadsheet system that helps me and others take control of their spending and budgeting. I’m making it available to you for free in the Microsoft Excel and Google Sheets file formats. Both can be accessed from my WebTalk Shared Files. If you are a WebTalk member, just connect with me, visit my page and look for the Budget Spreadsheet and grab a copy. If you are not a Webtalk member, you can join for free by clicking here and setting up a free account. Then you can connect with me and access my Shared files.




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