Does the word budget make you cringe? Has the idea of making and following a budget brought on stress and anxiety? Have you tried budgeting before, but found it to be overwhelming or too complicated?
I’ve been using a super simple budgeting system for about 8 years now. This simple and effective budgeting system got me through college, helped me pay off my student loans and my car before getting married, and is currently helping us budget to pay off our home!
I’m living proof that you can use a simple, stress-free budget to accomplish your goals and get to a more comfortable place, financially, without anxiety or complication.
This system is seriously so easy. It’s almost ridiculous to share, but I know it has helped me tremendously, and it might just help you, too.
All you need is a blank sheet of paper, pen, and your online banking login.
Yep, no fancy apps, subscriptions, notebooks, binders, and definitely no anxiety or overwhelm.
If you are ready to get your finances in order, and use a system that you can easily keep up with, then follow along to put your own simple and effective budgeting system in place!
The Simple and Effective Budgeting System
Get a few sheets of blank paper (I really just love a sheet of white computer paper!)
Pen or Pencil
Know your online banking login information
Ready to make a simple budget?
- At the very top of the paper, write down the previous full month and year date.
- Write down the following categories with room below to write: Income, Bills, Groceries, Gas, Clothing, Food Out, Gifts, Saving, Misc.
- Print the last full month’s bank statement that lists all of your purchases and income.
- Go through each item, assign it a category from above, and list the dollar amount and purchase place below the title.
- When you have assigned every item from the previous full month’s bank statement, total each category and circle it.
- Review this for a few minutes and think about which categories you can cut back on.
- Make notes on this page, write down what you think you should be spending on each category, and anything that comes to mind at this point.
- Now, get a blank piece of computer paper, write down the month you want to budget for at the top, and the categories with blank spaces again.
- Start with the income field. Write down the income you should make this month. If your income varies, go with the low side to be safe.
- Now, work on the bills category. List each and every bill you have and how much it is here. Put stars next to bills you could get rid of or try to reduce (gym membership, cell phone bill, cable, etc.)
- Add up all of your bills and subtract that amount from your total income amount. The amount you are left with can be divided up in the remaining categories. Make sure savings gets some!
- Next to the other category names, write a budget amount. I would be very conservative and realistic to start with. You could budget for $20 less than what you spent last month to start, or you may even want to only set a budget amount for certain categories to start with.
- Double check your math and make sure your bills and other categories add up to less or equal to your income amount.
- Once the month begins, record each and every purchase on this sheet under the appropriate category. Do your best to stay under the budget you set, but don’t beat yourself up if you end up going over. You will want to really track your purchases for the first few months, especially, to understand your spending habits. When you record every purchase, you can total up at the end of each week and see how much you have remaining to stay on budget.
This system is so simple, but also so effective. By recording every purchase you make, you can see where you money is going and where you spend the most of it. You can take the paper with you and record purchases right when you make them, total out at the end of each day, or catch up weekly.
Having a visual really helps me to see how much I’m spending in each category. I know they make apps for this, but the simple paper method is best for me to keep me focused on the most simple and key parts of budgeting, instead of fancy visuals and technology distractions.
Just getting to the core of a budget in it’s most simple form is, to me, the most simple and effective budgeting system. And it will work if you stick to it!
No need to get anxious and overwhelmed by talks of a budget, just grab you a piece of computer paper and get to it!
Other helpful tips:
- Add a debt payoff category and use our free debt payoff trackers to tackle your debt.
- Use with the famous cash envelope system by first budgeting for each category, adding that much cash to the envelopes, and write your purchases on the envelopes.
- To get a more realistic day to day picture, divide your monthly budget for each category by the number of days in that month. You might be surprised to find out you can’t afford a coffee every day.
- Use our 4 bank accounts system to categorize and divide your money to make the biggest impact.
- Not enough income to balance everything? Try getting a side job.
- Make some major goals and use a budget to crush them.
Try this system for a few months and see how it changes your spending patterns and you view of budgets. I think you’ll find that simpler is better in this case and much easier to stick with.
What are your favorite simple and effective budgeting tips?
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