A Step-by-Step Guide on How to Make the Perfect Budget

Consider this your map to financial independence.

I’m about to share with you a step-by-step guide on how to make a practical budget that ensures you reach your big financial goals. “Practical” is the operative word here. If you have high hopes, like when I started budgeting, and make your budget too restrictive, you’re going to blow through it every single time. What’s worse is that you may start to develop a mentality that you’re just not good with money. This couldn’t be further from the truth. Everyone is capable of being smart with their money. I firmly believe that money management is all about the perfect blend of knowledge & mindset. You need the knowledge to create a plan that makes your money work for you, and then you need the mindset to successfully follow-through with that plan.

I don’t know a single person who has met their financial goals without some form of a budget. A budget is the first, and most important, step towards financial independence. There are many different ways to budget. Some people budget bi-monthly, others budget monthly, and some even budget annually. You need to find what works for you. This will most likely be dependent on three factors: when you get paid, your regular expenses and your spending triggers. If your weakness is buying clothes when you’re having a bad day, a monthly budget rather than an annual budget will keep you more honest. For me, I get paid every two weeks, have few major expenses, and eating out is my weakness. I find that it makes the most sense for me to make a monthly budget.

When I started out, I made bi-monthly budgets. I found it so difficult and, to the surprise of no one, failed at staying within my budget almost every single time. Why? Because say, for example, I gave myself $50.00 for eating out. Well, technically I gave myself $100.00/month for eating out, but because I broke up my month in two budgets, I had zero flexibility with that expense. I might have had two birthday dinners to attend the first two weeks of the month, blowing my budget, but had no birthday dinners the last two weeks of the month. If I just gave myself $100.00 for the entire month I wouldn’t have blown that expense. Instead, I would get down on myself, when really it was completely preventable. See how important having a practical budget is…