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creating a budget

We all know budgets are helpful, especially if you struggle with impulse shopping, or have a habit of going to the supermarket for one item and leaving with a cart full.

And there are tons of advice articles and listicles that give you formulas to follow, from spreadsheets to pie charts.

But many people make the mistake of living by the example, and with budgets, it’s important to remember that sometimes you’re the exception, and not the rule.

You need to ask yourself: what’s the best way to create a budget that works for my lifestyle?

Don’t make the mistake of creating a budget for the life that you think you should be living – one for the super frugal coupon shopper or the extravagant spender – but for the life you are currently living. With some wiggle room, of course.

1.  Not having an emergency fund.

This is the most important part of budgeting.

You want to make sure that, whatever happens, you don’t dip into these savings because you’ve decided to splurge on a holiday or a new wardrobe.

This is for pet hospital bills, actual hospital bills, mechanic costs for fender benders, etc.

The recommended amount for an emergency fund is usually two months pay, so whether you deposit this cash into your savings immediately or chip away at your weekly/bi-weekly paycheck until you have this saved up, this is an important step of budgeting.

And if you do have to use this money, make sure you save it back up again, however long it takes.

Better to be saving in the long term, than panicked in the moment!

2.  Not saving for the future.

This is money you should be putting away after (or during) saving for your emergency fund.

Whether you’re putting money into your retirement account, a savings account, or hiding it in your mattress (not recommended), saving for the future means you’re keeping your best interests in mind.

Whether you want to put aside some money for retirement, your kid’s college funds, an extension on the house, or that dream vacation you’ve always wanted, your rainy day fund should be slowly building up, safe from daily spending and rash credit card swipes.

Use automatic deposits that pull from your checking account, or use a round-up system that saves for every dollar you spend. Cents add up quickly!

3.  Not planning for the worst.

There’s nothing worse than assuming you’re bills will come out low, and being proved wrong.

Whether it’s high heating costs, your monthly auto insurance payment going up, or your kid leaving every light in the house on while you’re away for the weekend, high bills can sneak up on you.

It’s best to budget high, and have money left over, than it is to low-ball your bills and have to constantly tweak your budget to fit.

Always expect to pay more for heating in the winter and electricity in the summer (thank you air conditioning).

Better yet, install a meter that lets you know how much your energy output is costing you, and adjust accordingly.

4.  Not leaving wiggle room.

Life shouldn’t always be about pinching pennies. “Work hard, play hard” is a mantra we all should follow, because if we’re only living to work, and not working to live, we’re not enjoying life to the fullest. So make sure your budget isn’t all about bills, mortgages, and retirement accounts (although these are important too).

I only know one person who enjoys making budgets, and she is really experienced in spreadsheets.

The rest of us find it a chore, or worse, depressing, when we see how much we’re in the red every month, or how little we have to spend on fun stuff like nights our or spa days or ice cream trips with the kids.

The best way around this?

Find a budgeting app, like Every Dollar Budget App, that takes the stress out of budgeting. Created by Dave Ramsey, this nifty app shows you how to create a budget and plan ahead, with no complicated spreadsheets, and easy accessibility straight from your phone. Other great apps include Qapital and Mint. So stop stressing, and start saving!

{This blog post is not affiliated with or sponsored by any of the brands or businesses in this post.}

Featured image via Stocksnap

 

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