When starting a budget, you have to consider every area in which you spend money and where you need to save. The categories I have in my budget are Savings, Tithe, Gas, Food and Misc. Thankfully, right now I'm living in a dorm so I don't have any bills to pay. After considering all the categories, you then need to find out what percentage you will put in each. My whole life I have learned that I should always tithe 10% and save at least 15%. I personally like to save more than that simply because I know that as soon as I graduate, I will have tons of loans to start paying off from my education. (Side note: Debt is something I will always try to avoid, but a college education is worth it!) So I put 20% of my earnings into saving. Next is gas. Gas can always be a little iffy because prices are always changing and you might drive more one week than you will another. I have found that I typically spend about 20% of my earnings on gas, but to be safe, I chose to put 25% of my earnings in to gas... just in case! Next is food! With food, you need to consider how much you spend going out, how much you spend on groceries, how much you spend on random drink stops, etc. For me, 25% of my earnings usually covers it and then some. Finally I have a section for miscellaneous spending. This would include clothes, anything I want to buy myself, birthday presents, etc. In my opinion, this category is the least important because it isn't a necessity like all of the other categories. For this section, I simply calculated the total percentage I have accumulated from Savings, Tithe, Gas, and Food, and whatever was leftover went to misc. For me, that leaves 20%.
I know that was a long explanation, so to put it simply, this is what my budget looks like:
- Savings - 20%
- Tithe - 10%
- Gas - 25%
- Food - 25%
- Misc. - 20%
Once you have the percentages figured out for your budget, it is important to keep track of your spending so that you do not go over what you have. I created a spreadsheet that allows me to monitor my money and calculate what I have left after every purchase. Here's what it looks like!
**Click here to print this spreadsheet**
Along with the spreadsheet, one way I avoid going over my budget is by using an envelope system. This means, I use cash! Every time I get a paycheck, I go to the bank and I get it in cash. Then I distribute the money based on the percentages into envelopes (one envelope per category). This allows me to just grab the cash out of the envelope every time a make a purchase until the envelope is empty, not allowing me to go over budget. Yes, using cash can be a hassle and sometimes scary caring it around all over the place, but if you only carry the money you will need for that day, then you won't be left carrying around as much money... and you'll be less tempted to spend your money because you will be more limited.
Money is not necessarily fun to budget, but in the end, it is so worth it!