First, let’s review Steps One and Two.
STEP ONE Decide to decide
You have to decide that you’ve had enough! The very day that Jenn and I started budgeting was the very day that we started winning with money!
STEP TWO Determine the income (take-home pay) you will receive during the NEXT month
This income is what you will be spending on paper BEFORE the month, the money, and the bills ever arrive!
STEP THREE Enter all of your expenses for the NEXT month
This is where we get to actually spend our money on paper! So we have already determined our income for next month, now it is time to actually spend the money BEFORE the month arrives! The absolute best way I have found to input my expenses is to use real, actual expenses that will happen. NOT averages for the year. If you don’t know the actual cost, enter an educated guess based on recent spending.
If the expenses are not relevant to the next month, it is highly possible that you will consider the budget irrelevant for the next month!!
Enter all of the expenses into your budget. You can obtain a FREE COPY of our budgets by clicking HERE. To find out which budget is right for you, check out Step Two of this series.
Each budget form has some excellent features built into it:
- If OUTGO exceeds INCOME, the TOTAL will turn RED and tell you how much you have overspent! Do not stop if the total goes red! Can you live with a total in the RED? Absolutely, with the help of credit cards! Living in the red is how people get into debt and stay in debt.
- If INCOME exceeds OUTGO, the TOTAL will turn YELLOW and tell you how much more money needs to be named!
- When INCOME = OUTGO, the TOTAL will turn GREEN…This is the ultimate goal!
- There is an ACTUAL column that can be used throughout the month to track your progress.
Our goal for this step is to get all the expenses into the budget. We’ll work on getting it green next.
How are you doing so far entering all your income and expenses into the budget?