The term “budget” often has a negative connotation.
It can feel constrictive, limiting, and like it’s generally cramping your style.
However, budgeting your income can be empowering.
The key is making sensible adjustments to your budget on a regular basis.
Start with a Realistic Budget
In order to create a budget for your lifestyle, assess your actual spending for basic items like rent, utilities, and food.
You will need to be honest with yourself by including all relevant expenses for each category.
It is helpful to put all of your expenses in one of two categories: fixed or variable.
Fixed vs. Variable Expenses
Fixed expenses are typically those costs that will not go up or down on a regular basis. For example, if your rent or mortgage payment is $2,000 every month, then we can safely put this in the fixed expense category. Other fixed expenses could include your TV and internet expenses.
Variable expenses are typically those costs that go up or down on a regular basis. For example, your electricity bill is going to fluctuate based on how much electricity you are using every month. During the summer and winter months, you will likely use your air-conditioner and heater (assuming it’s electric and not gas) much more than you would during the spring or fall months. This could cause a much higher bill such as a $150 bill in July and December vs. a $75 bill in April and October. This variability based on usage would mean this expense goes in the variable expense category. Other variable expenses could include your water and gas expenses.
These variable expenses make a great case for why your budget should be more flexible than strict. Based on this, it would make sense to have a different budget for every month of the year. You can use historical expenses from last year as a framework for creating your current annual budget.
Organize Your Budget in a Manageable Way
Your budget can be managed in a myriad of ways – via a budget binder, a bullet journal, or a simple Excel or Google Sheets worksheet budget. Additionally, if you’d like to have a less labor-intensive way to manage your budget, try one of the many budgeting apps available.
Whichever method or method(s) you try, find what feels the most comfortable and intuitive for you. This is what will make it feel more freeing than limiting.
