5 Easy Steps to Budgeting – Step 4

In this series of post, I am sharing the process that Jenn and I followed to develop a budget that actually worked!

Here are the steps that have already been shared.

STEP ONE  Decide to decide
You can not start winning with your money until you decide that budgeting is crucial to taking your finances to the next level.

STEP TWO  Determine the income (take-home pay) you will receive during the NEXT month
The key word in Step Two is NEXT. A budget must be completed BEFORE the month begins and BEFORE the money ever arrives.

STEP THREE  Enter all of your expenses for the NEXT month
This is where you get to actually spend your money on paper before the month arrives!

YOUR INCOME IS LIMITED! If you bring home $3,000 during the next month and spend $3,208, your spending plan will not work! Where will the extra $208 come from? It will have to come from savings OR from debt – usually in the form of a credit card. If you spend more than you make, no matter how much you make, you WILL have to make that up somehow!

In Steps Two and Three, we entered all of the income and expenses into the budget and, no surprise, the OUTGO exceeded the INCOME. You can see the entire budget HERE.

budget image

So OUTGO exceeds INCOME…now what? We have two options.

  1. Increase the INCOME – you could get a 2nd job, work overtime, turn a hobby into a business
  2. Decrease the OUTGO – get rid of some expenses

NOTE: This is not a “perhaps, perhaps, perhaps” type of budget! This is how the family will ACTUALLY spend their money next month! Remember – if your budget is not 100% relevant for you and your family, you will ignore the budget and use it to start a fire in your fireplace!

What expenses can be eliminated from the example budget? Again, you can pull a copy of the budget HERE.

After working together on their budget, the family decides on the following changes.

5 Easy Steps Image - Changes


If you want to see the entire EXACTLY ZERO budget, you can view it HERE. You might be saying, “These people are CRAZY! They cut out 1/2 of their dining out, entertainment, blow money, and all of their babysitting money!” I would say – “NOPE! They have had enough. They are so sick of living paycheck-to-paycheck that they are willing to live differently and change their lives forever. All because of a little sacrifice now!”

We only have ONE step left!!

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