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Quickstart guide to a healthy household budget (Part I)

piggybank_360.pngTable of contents

  1. Quickstart guide to a healthy household budget (Part I)
  2. Budgeting (Part II): Where does the money go?
  3. Budgeting (Part III): Debt checkup – how much do you really owe?
  4. Budgeting (Part IV): Savings essentials – How much should you be saving?
  5. Budgeting (Part V): Financial checkup – Five tips for cleaning up your spending habits
  6. Budgeting (Part VI): Staying on course – Keeping your budget on track

We know it’s not easy to put together a budget and if budgeting tends to fall low on your priority list, you could be setting yourself up for financial stress month after month. Creating a realistic budget is actually fairly simple but does require taking an honest look — a very honest look — at your spending habits and current financial situation.

Benefits of budgeting

But why bother with budgeting in the first place? A few reasons that might motivate you to get started:

  • Deciding where your hard-earned money is going, instead of feeling like you’re at the mercy of bills
  • Having more control of your financial situation
  • Making better purchasing and spending decisions
  • Saving money by avoiding costly money mistakes
  • Dealing with less financial stress because you’re living within your means

Over the next few weeks, we’re going to walk you through the budgeting process so that you have all the tools you need to create a budget that’s aligned with your needs and lifestyle — and is one that you can stick with for the long-haul.

Tips for taking control of your finances right now

You can take charge of your financial situation at any time so don’t wait for a financial emergency to start budgeting. Give yourself the peace of mind knowing that you have plenty of money to cover your expenses and are also contributing to a savings vehicle (or two).

Here are some things you can do right now to take control of your financial future:

  • Get comfortable with a budget spreadsheet. Whether you want to use budgeting software like You Need a Budget or a basic household budget spreadsheet template, take a look around and choose an option that doesn’t feel overwhelming. The best programs and templates lay out expenses, income, and savings data in different columns and have space for notes and other entries that you might want to add along the way.
  • Start tracking daily expenses. Your challenge this week: Log every single purchase made for at least the next 72 hours. Not only will this make you more mindful about your spending habits, but it can also help you see exactly where your money is going each week. Whether it’s a few cups of coffee, lunch at your favorite spot, random household supplies you needed this week, or a last-minute grocery run, just start tracking all of your expenditures to get an accurate idea of what you spend your money on. We’ll go into more detail about managing expenses in Part II of this series.
  • Ditch the credit cards… at least for a week. Make a commitment to pay only with cash for at least the next seven days so that you can break the credit card habit. If you are in the process of making a purchasing decision for a big-ticket item, take the time to shop around for the best deals, seek out rebates, and determine whether you can really afford the item without putting it on a credit card. This can be difficult to do if you’re a frequent credit card user but breaking the habit sooner than later is a big step toward getting your finances on a healthy track.

What’s next: In the next instalment of this quickstart guide to the healthy household budget, we’ll be taking a look at spending priorities and where your money goes each week.