Day 3 / 31 – Start a Budget

Day 3: Start a Budget
Day 3: Start a Budget

The challenge for day 3 is to start a budget and plan on how you are going to spend your money this month. A budget not only ensures that you have enough money assigned for all of your expenses (and avoid running out of money at the end of the month), it also guarantees that you plan ahead and start setting aside some money to pay down debt or to add to your savings. Without putting in a plan, these long-term goals are unlikely to get prioritized and are therefore often forgotten about.

As you start your budget, think about the various expense categories that you have (such as utilities, car payments) and the individual expenses you have within each category (electricity, gas, water) that are likely to come up this month, both ones that are relatively predictable each month (such as rent / mortgage, groceries, utilities) as well as any less regular expenses such as birthday presents, clothes or meals out in restaurants.

Once you have a list of all expenses you expect to have, look at your expected income for the month and start assigning your money to each category, being careful not to budget any more than you have coming in. You can do this again on paper, in a digital spreadsheet or in a budgeting app or online program.

If this is the first time that you are making a budget, it is unlikely it is unlikely to be very accurate just yet. That is okay, as you go along you can make further adjustments, taking money from categories that turn out to need less money this month and then taking it to expenses that are turning out more expensive.

Once you have set your budget, make it again a habit to do this every month, in this way your budgeting skills will not only improve, it will also become a more and more powerful tool to control your spending and start working on long-term financial goals.

If you need any help or support or when you are ready to check in and tell everybody you’re done, make your way over to the Facebook group to leave a comment or send out a Tweet using the #31DayChallengeToFE hashtag. If you need any extra help or ideas, to complete this challenge, you can find more details in the following steps of the 100 Steps Mission to Financial Independence: Step 8: classifying expenses, Step 17: Start a budget and Step 19: Budget with the 50 / 20 / 30 rule.

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