A Budget Does Not Have to be Scary

Many people don’t know how to create a budget or spending plan and don’t know where to start. The first step to getting out of debt is by creating a budget. Creating a budget shows accountability for your spending and shows you how much you have coming in and how much you have going out.

A budget is an itemized summary of your total monthly income after taxes minus – everything you spend money on. A budget helps you prioritize your spending and helps you manage your money no matter what your income.

A budget is only restrictive if you don’t have any extra cash left over after you pay your bills. Make your budget flexible so you have “wiggle” room for unexpected expenses. If you don’t have an emergency fund or savings to cover those unexpected expenses you can see right away what areas in your budget you need to reduce spending instead of using a credit card to pay for those unexpected expenses.

The first step is to determine if there are some areas where you are spending too much money, you want to have a balanced budget of 70-20-10 and make sure you don’t spend too much money in any one area of your budget. Develop financial goals for yourself when creating your budget.

Seventy percent of Americans live paycheck to paycheck and forty percent of Americans live above their means. This statistic shows there is a serious problem in America.

When your budget is out of balance you use credit cards or risky financial options when causes you to go into debt and this can lead to serious financial problems such as foreclosure, bankruptcy, etc. If you know how much money you earn you should also know how much you spend. Here are 7 ways to create a budget and track spending.

Subtract monthly expenses from your monthly income. If the total is negative or less than 5% of your total monthly income that is a red flag that you need to make some major adjustments to your spending.


Track spending daily, weekly or monthly. The ideal method is weekly. Keep all your receipts and reconcile your bank accounts. Use an automated software tool, pen and paper or the envelope method.

Balance Spending

Spend 70% of your monthly income, save 20% of your monthly income and donate 10% of your monthly income to charity. This ensures you have a balanced budget and prevent overspending.

Create a Support System

Surround yourself with at least three people who are doing better financially and gain financial advice from them.

Evaluate Spending Habits
Don’t keep making the same mistakes.

Seek Assistance
Seek professional help if necessary.