Step 4
Budgeting!
I know you've probably heard this one million times: create a budget. But how do you even create a budget and why?
First, a budget will help you take control of your finances– this is a great way to see where you are financially and gauge where you can be. A budget is also essential to really SEE how much you are spending every month– you'll be surprised how much or how little you're spending on the fun things every week. It can be crazy how fast the "little" purchases add up.
Ramit Sethi, the author of I Will Teach You To Be Rich, has a wonderful way of budgeting. I prefer his method because he stresses that you don't need to cut out everything you enjoy to have a great financial life. In fact, he discourages being overly frugal, and has a system that encourages balance. Because I like his method so much, I'm going to link the article here that will walk you through how to create a budget. Here's a link to his article about how to create a budget:
https://www.iwillteachyoutoberich.com/budget-help/
Please take notes in your Money Journal! Now that you've created a budget, it's important to try to stick to it– see for one month how your budget works out.
Do you spend too much? Do you have enough in savings at the end of the month? Did you go over your budget– which categories did you overspend in and how will you adjust your budget going forward?
Budgeting creates a new sense of responsibility– it may feel stressful at first, but you will probably find yourself enjoying the boundaries after one or two months. It should even feel stress relieving– you mean, I can spend $100 on entertainment this month? And I've already allocated money to my retirement and emergency fund?! That's great! You'll soon find things feel very organized for you, and it should help ease the stress you feel towards money, monthly.
Once you start automating your savings too, you may not have to adhere to a budget as strictly, or at all.