Budgeting Tips

How to Create a Beginner’s Budget

July 10, 2016

How To Create a Beginner's Budget

What is a beginner’s budget?

A Beginner’s Budget can be your first real look at your spending and your finances. Once you realize that you are burying yourself further and further in debt, you start to feel hopeless. It can feel like nothing works for you to save money. Tracking all of your receipts can become overwhelming, especially when there are two people spending out of the same account.

So what can you do?

You can create a beginner’s budget!

I want you to spend the next 30 minutes looking over your bank statements. I find that most people out here in the Bay Area don’t often carry cash. I, myself, am one of them. When Michael and I were really struggling for money we made three big changes that changed our lives and this is what I consider to be my beginner’s budget.

1- Take 30 minutes to look over your bank statements
  • Where have you spent the most money?
  • What day do you spend the most money? (This can be hard to track with bank statements since the credit card charges sometimes don’t post until 2-3 days later- but be aware of that late night trip to Target every Thursday evening…)
  • Calculate the total amount of money you’ve spent at each of these places for the month.
  • Decide right now which of these places are important for you to visit every month, and which places you didn’t realize you go to so often. Make a list of the places you can avoid. (Fast food- I’m looking at you!)

This is the first step. Just take those 30 minutes to do a mini-analysis. Don’t overwhelm yourself. This is about creating small, but everlasting changes!

2- Have two cards for the same account? Leave one at home.

Michael and I both have cards associated to shared accounts, but the best way to be sure we don’t overdraft- we only use one of the cards that’s been issued at a time.

When I’m at work, I don’t need the card. Michael can use it. If I’m going out for the day and Michael is home, I use the card. If you are down to your last $100 in your checking account and both of you are aware that the $100 is in there, you may find that both of you have plans for that money.

Don’t create your own overdraft!

3- Make gift cards for places you want to limit your spending

When Michael and I were having major difficulties with our spending, we were still visiting places like Target everyday to grab food for that evening’s dinner. We’ve since learned about meal planning and once a week grocery shopping which has severely cut down on our spending. But one thing that helped us to get started, is similar to the envelope system of budgeting.

If you’re not familiar with the envelope system, the basic concepts are to plan out how much money you will spend at each place for the week, and only allow yourself to carry that much cash with you. Each time you spend, you keep the receipt, track the amount, and now you only have so much left over to continue the rest of the week.

This is a great concept if you have a large purse and feel comfortable with carrying around lots of cash on you. I’m not one of those people. I hate carrying a purse and I hate carrying cash. But one way we were able to make this system work for us was with gift cards.

At the beginning of the week, we decided we would only put $100 on the Target gift card. (Sorry Target, I’m mentioning you again… You always seem to get me with your deals!) Once that $100 was loaded on the card, it felt like we were more conscious of what we were purchasing. Even now when we received gift cards from the wedding, we feel a different sense of savings with them.

There is more of the thought process of:

“If I spend the money on the gift card, I wont have the funds if something more important comes up later”

For some reason that same thought process doesn’t come up with cash. Maybe it’s because I get a paycheck every two weeks so I feel it’s a constant income flow, and if I spend it, more will be replaced later…

With the gift card, I’m not getting married every weekend and my family isn’t giving me gifts every weekend either. Use this system of buying a gift card, loading it with money, and only spend what’s on the gift card.

Checking your bank statements first will allow you to see how much money you actually spend at these places each month to know how much you may need to load onto the gift card.

Now let’s go even further!

If you usually spend $300 at that store every month, try loading $275 for next month and see if you can get by without spending that extra $25. If you can, try for $250 the month after that. See how low you can get it, but be sure to always start with how much you’ve spent previously. You don’t want to under budget yourself and start the chain reaction of discouragement and failures.

Let’s go for small wins and long-lasting results!

-Emily

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  1. I am definitely going to try this approach to budgeting. I love the gift card idea much better than the cash envelope system, because who has time to go to the bank and withdraw money? Anyways, I have been putting off the task of creating a budget for some time now. After reading your post, I am motivated to tackle this and put our family spending on check! Thank you for the ideas!

    1. Thank you! I have my 7 day email course to setting up your beginners budget as my thank you for signing up for the email list. You’ll get emails over the next 7 days to help you set up your budget if you’re interested. And I agree about the gift cards. I definitely don’t want to carry around tons of money like that either. It can be dangerous. Good luck with the budget and if you want any help, any guidance, let me know!

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