Budgeting – Where to Start

“That’s it,” you say to yourself or the family at large, “we are going to create a budget that works and stick to it!” You grab a notebook or legal pad, the nearest writing utensil, and sit down to begin making this “One Budget to End Them All.” But where do you start?

Budgets are the first step to financial fitness. As a military wife and mother of two, they are also one of the hardest things to do, particularly when DH is away. There are several steps to making a budget. In this article we will cover the first of those: Where to start.

First things first, if that writing utensil is a pen, you better change it out for a pencil. If you have saved all your receipts and pay stubs from the last month, or have your bank statements covering the last calendar month handy, then you’re all set to move forward. If not, then save your receipts and pay stubs this month, and continue to the next step at the end of the month.

The key to doing anything and it sticking is to turn it into a habit. If you just spent the past month getting receipts for everything you spent and saving them, then you have just made a habit of saving your receipts. Congratulations!

Why “Baby Steps”? Lasting changes to behavior (and budgeting successfully does require some behavior changes) is done by making small changes and taking big things one step at a time. Little steps lead to BIG success.

Baby Step 1: Save your receipts.

How long do you have to save receipts? We recommend saving them until the end of the month so that you can refer to them when you’re tweaking the next month’s budget. Pay stubs should be kept until the end of the year.

What should you get receipts for? EVERYTHING! Getting receipts for everything including cash transactions lets you know exactly where every dime of your money went.

Baby Step 2: Determine your income.

Since you saved all of the paystubs from the last month, this should be easy. Simply add up your net income (how much you actually brought home = pay after taxes/how much actually gets deposited into your account). Round this number down to the nearest hundred. That is the amount of income to budget with.

For example: My husband brings home $3467.85, so we began budgeting with $3400.00/month.

If you’re reading this and haven’t done anything yet, here’s your homework before the next article.

Homework: Gather your receipts and paystubs from last month, or spend the next month collecting receipts for everything. Then work through the first two Baby Steps.

Next Time: Baby Step 3: Budgeting the essentials.