How To Prepare A Budget That Works

There are a lot of people who struggle with budgeting. They know theyshould have a budget, but there never seems to be enough time, energy, or money to prepare one.

I know the feeling. However, I also know the feeling of not having control of my money and always running into financial disasters toward the middle to end of each month. It was in December of 2002 that I experienced my IHHE Moment (I Have Had Enough Moment) and resolved to figure out a way to gain full control of my money. By July of 2003, I figured out a way to make budgeting work for my family. Below are the steps I put into place. If you put them into place, I’m confident this budgeting process will work for your household too!

  1. At least 3 days before the month begins, make a list of all your expected income and expenses for the upcoming month.
  2. Pull up the FREE BUDGET TOOL. Enter the income and expenses into the worksheet.
  3. Modify your income/expenses to ensure that the following formula is true: INCOME – OUTGO = EXACTLY ZERO

It really is that simple.

However, before you dive into preparing your best budget ever, I urge you to consider a few tips I’ve learned along the way:

  1. Prepare the budget BEFORE the month begins (before you get paid and start spending money). It is very difficult to prepare an effective plan in the midst of already spending it!
  2. Be realistic. I found that my previous attempts to budget failed because I was lying to myself and not being realistic.
  3. Put some fun in the plan. It really is okay to spend some money on FUN – as long as you aren’t mortgaging future plans, hopes, and dreams in the process.
  4. Use cash envelopes or a pre-paid gift card for categories where you have a tendency to overspend. This has worked wonders for my budget! The categories I use cash envelopes for are groceries, restaurants, clothing, spending money, and entertainment.
  5. Recognize that you will forget some expenses – especially in your first few budgets! I’ve seen many people address this by putting a “I forgot!” line item in their budget to cover these forgotten expenses.

Now go put that budget together, and start winning like never before!

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1 Comment

  1. Mike on April 10, 2013 at 9:46 am

    Great stuff Joe!

    One thing we do with our budgets is that we keep track of the “actual” amounts spent each month and compare them to our budgeted values. This helps us adjust any categories if we see a trend. We also are then able to look back at last year’s budget for a particular month and see what items we may have missed for the current year, like an annual vehicle inspection (who remembers what month that is due?), or maybe some lawn care expenses, or sports registration for kids.

    Thanks for your wonderful ministry! Keep up the good work!

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