I know you’ll agree with me when I say that many of us want to live debt-free. Believe it or not, this can start with a budget planner.
My wife and I used a personal budget planner to get us out of our $40K debt. We learned how to budget money quickly because we had to.
After 2.5 years, we became debt-free.
Budgeting can be HARD, but it doesn’t always have to be that way.
Since we’ve been free from debt for a couple of years now, we’ve been able to:
…. save more than $350,000 in three years
…. stop living paycheck to paycheck
…. live the life that we’ve always want to
In this post, I will detail the ways you can use to succeed at budgeting without too much hard work.
You’ll also find examples of personal budget categories to give you ideas on what to include in your budget planner.
An eye-opening fact: In 2016, the average household earned about $74,000. Average expenditures, on the other hand, were $57,311, leaving $17,353 in free cash flow. That’s not a lot of money for other important things.
Budget Planner: How To Budget Your Bills Like A Pro
A good personal budget planner or budgeting planner is one that helps you achieve your desired outcome (whatever it may be).
It allows you to not worry about money today, tomorrow, and some other time.
A budgeting planner can be restrictive, but it doesn’t always have to be.
Let’s hop in and see how to budget money and what you need to make a flexible budget that won’t choke you at all.
1. Find your endpoint.
Believe it or not, the first thing you need to do when using a personal budget planner is to find what your goal or goals are.
Do you want to go on a long and winding road without any end on site? I assume your answer is no.
It’s hard to plan out your strategies when you don’t know your goals.
Do you want to live cheap and still live rich? Do you want to be debt free, have money for Christmas, need money for tuition fees, etc.?
Your goals will dictate what kind of budgeting strategies you need to implement. They will help you determine how to budget your money.
2. Find your starting point.
Learning how to budget money means finding your starting point.
Figure out how much your total debt is.
Track your debt payment progression, which you can do with your personal budget planner, each month to see what’s working and what’s not.
Trust me on this:
You’ll feel better knowing that you see, on writing, that your debt continues to come down.
If you, for example, owe $100,000 and pay $100 this month, don’t look at $99,900 as a big amount but as an amount that’s lower than last month’s.
Finding your starting point will also help you realize other adjustments you need to make.
For example, if you think you may not have enough, you can try the following money-making ideas:
- Sharing your opinions and get paid to do it <— One made over $4,000 in a month
- Signing up for bonuses
- Starting a blog <— I made over $40K per month while blogging 5 hours a month
3. Create a budget that works for you.
Don’t just create a budget based on others’ situations.
Create one that’s specific to you – one that helps you reach your goals.
This Budget Planner details everything from expenses, income, goals to debt payment strategies you need to reach your budgeting goals.
When we created a personal budget planner for us, we took our time to develop one that fits our needs and wants.
There are so many budget formats, styles, and contents out there. Use them as inspiration and guide and not as a requirement to help you create one that fits you.
4. Plan for the unexpected.
Sometimes, things happen that are out of our hands. They do.
It’s always best to have an emergency fund in place so you don’t get sidetracked on your ultimate goal.
Believe it or not:
Unexpected situations that involve shelling out money can be a derailer of successful budgeting.
Here’s an interesting fact: A majority of Americans would struggle to find $1,000 in an emergency.
You don’t want to take money that’s allocated for debt payment to pay for fixing a big car-related bill. Things can get messier when you don’t have an emergency fund.
Here’s a kicker:
Your emergency fund doesn’t have to be fully-funded overnight.
Just like paying down debt, you can stash a small amount of money each month towards your emergency account.
5. Prioritize your expenses.
Unless you have an unlimited amount of money, chances are what you have right now may not be sufficient to cover all your needs and expenses.
When it comes to executing an effective personal budget planner, prioritizing your expenses is key.
Ask yourself which expenses are important, and which ones need to be cut down or off.
If you need assistance, here’s a great tool:
Trim, a personal finance app, analyzes your accounts to find recurring subscriptions and finds out where you can save more money.
It does the legwork of finding bills to cut out and bills to negotiate so you can focus on other important things.
6. Follow through your budget.
Budgeting isn’t just a one-time thing.
Here’s the reality:
There’s no shortcut to effective budgeting.
You need to track and adjust your budget constantly.
Don’t just create a budget and let it go. That said, using a personal budget planner and making necessary tweaks gets better and easier with time especially when you do it on a monthly basis.
Budget Planner and the Personal Budget Categories
Since I started blogging, I have stated that one of the necessities to start a sound financial future and to get out of debt is to start with a budget or creating a budget.
I cannot count the times I blogged about the importance of budgeting.
In six months that I have been blogging, I have created more than three different posts on budgets. Just today, I tried re-reading my budgeting-type posts and found something that’s missing, that is, how and where to categorize expenses.
I have to admit that because I have been budgeting even before my daughter was born, categorizing expenses comes naturally to me.
Luckily, no one has ever messaged me or commented that I needed to write about personal budget categories (i.e., expense categories).
Having said that, I believe in making things understandable and easy to remember and, of course, categorizing expenses is no exception to that rule of mine.
As I said in my previous posts, budgeting can be difficult, but it is doable with time, patience, and practice. Just because you failed on your first budget doesn’t mean that you should stop. I can’t remember how many times I failed on following my budget.
When I said failed I meant that I went over what I budgeted for.
Had I quit budgeting a long time ago, I would not have been able to straighten my finances. Budgeting for me was one of the foundations of getting my finances in order.
In the case of finances, it’s easier for me to see things black and white when everything is written down. I can compute in my head, but I won’t rely on it because I know I will forget something to include in the calculation.
In order household, we use the Budget Binder Printables to help us effectively budget and manage our money.
These printables have continuously helped our family get our budget in control and saved a ton of money even on a single income.
We paid off our $40K debt and, at the same time, saved at least $70K in 2.5 years with the help of these printables (click here for the full story).
To compile these personal budget categories, I had to ask for some help from my co-workers, friends, family members, and my dear wife to make sure I capture as many expenses as possible to appropriate categories.
Income can come from different sources, but the most popular source is from your employment.
- Side Hustles
- Tax refunds
These are the funds that you stash away for many reasons such as retirement, emergency, leisure, short-term requirements, among others.
- Retirement Funds (e.g., IRA, 401(k) and pension)
- Emergency Funds
- Short term savings
We all have bills to pay, and utilities are among those bills. Most of our utilities are necessary services, which we need for our daily living. Examples of these are electricity and water.
- Water and Sewer
- Natural Gas
- Cable or satellite
A housing may be one of the most expensive expenses/investments people may have, but it is also a necessity. When you have a house, you are not only talking about paying your mortgage.
There are other expenses that come with having a house. These expenses include home insurance and maintenance. If you are renting, your significant housing expenses are rent and renter’s insurance.
- Rent or mortgage
- HOA fees
- Repair and Maintenance Fund
- Property taxes
- Renters or Homeowners’ fees
- Home improvement
- Home warranty
Many people owe student loans, personal loans, and some other forms of debt. It is necessary to allot a portion of your income to satisfy your debt responsibilities.
Remember, not paying your debts may or will cause you more financial problems now or in the future.
Here’s how to budget money, or how to make a monthly budget, or what to consider when budgeting for debt payments.
- Student loans
- Credit cards
- Medical bills (i.e., outstanding bills other than indicated on a medical section of this post)
- Personal loans
- Funds borrowed from friends and family
Some of us are not fortunate to live in a place where public transportation is reliable. As such, we need cars, bicycles, and something to get us to where we need to be.
Of course, there are costs associated with having and maintaining vehicles.
- Car payment
- Auto Insurance
- Maintenance and repairs
- Fees (i.e., tags and title)
- Vehicle inspectionProperty taxes
- Public transportation/parking/taxi
Insurance and wellness
Medical, dental, and vision-related costs are expensive. So, without insurance, you are looking at paying hundreds, thousands, or even millions of dollars over time. It’s always best to obtain insurance.
As many people say, prevention is better than a cure.
If this means that you have to dedicate some money towards wellness (e.g., gym), then, do it because it may or will save you more money than spending money towards out-of-pocket medical, dental, and vision expenses.
Here’s how to budget money or what to consider when budgeting for insurance and wellness.
- Insurance (i.e., health, dental, and vision)
- Wellness (i.e., gym)
- Life insurance
- Disability insurance
- Burial insurance
- Out of pocket medical costs
Some of us budget a small part of our income towards food while some budget a big chunk. Food is, will, and should always be a part of one’s budget even when you are getting food for free (thanks to coupons).
Another way to budget for food is to use a meal plan. My family uses PlateJoy, and it has helped us cut down our food budget to $150/mo for a family of 6.
- Eating out
- Reserves (just in case you are into stocking up because you have a ton of coupons to use to save money)
These are things that we need to not look like cave dwellers (not that it’s bad). What I am saying is that we need these personal effects to look right, be hygienic, look presentable, and look neat.
- Children’s allowance
- Beauty/Barber Shop
- Laundry/Dry Cleaning
Saving money is good but having fun is good, too. Always make sure that there is a balance between saving and having fun. Remember that unexpected things can happen anytime.
As my wife and I always say, even if we have a ton of money saved but if we don’t have fun (e.g., don’t do extracurricular activities and don’t go on vacations), then, saving is close to being useless.
Here’s how to budget money, or how to make a monthly budget, or what to consider when budgeting for leisure/entertainment/other activities.
- Charitable contributions
- Movies, concerts, videos, theaters, etc.
For those working individuals, child care is needed for their kids. There are daycares that are reasonable, but there are also ones that cost you a lot (more like your paycheck).
But at the end of the day, somebody needs to look after your kids whether you like it or not.
Here’s how to budget money or what to consider when budgeting for childcare.
- Child Care/Babysitters
- Child support/Alimony
- Child necessities (i.e., food, diapers, formula, and other expenses not covered elsewhere found)
Costs of education can be minimal or can be expensive. While the costs of education (i.e., kindergarten up to high school) may be free, you are still looking at paying quite a few expenses like school supplies, sports activities, among others that can or will add up.
Not to mention, your cost of education will go up once your child goes to college.
- Tuition and fees
- School supplies
- Extracurricular activities
These are expenses not mentioned above you need.
- Kids’ allowance
- Pet care/Supplies
- Computer expenses
Having a working personal budget planner can be daunting and difficult, but it doesn’t always have to be.
Learning how to create a budget is a process. It doesn’t happen overnight or won’t be effective in a week or two. It’s a continuous process that needs to be tweak from time to time.
That said, learning how to budget money or how to make a monthly budget gets better with time and its results are beyond outstanding.
Start your personal budget planner now, and start making great changes to your finances.
Do you think a budget planner will help you achieve your goals (e.g., debt payoff and downpayment for a house)? Do you now have ideas on how to budget money effectively?