I think it’s safe to say no one likes to hear the B word, budgeting. In fact, when I tell people they need to create a budget 9 times out of 10 they let out a big sigh. But creating a budget is the first step towards generating wealth and becoming free and living life on your terms. Everyone needs a budget, you need a budget, I need a budget, even Congress needs a budget (although Congress balances a budget is a topic for another post), a budget is a planning tool. While a budget is an essential part of living a financially free life a lot of people are wary and wonder, “How do I create a budget”.

Budget Basics

Creating a budget doesn’t have to be difficult. In fact, once you create your budget you can easily replicate it month after month. To start your budget preparation, begin tracking your monthly expenses, this will give you a baseline for how much you are spending on food, entertainment, and miscellaneous. Fortunately, things like rent, utilities, insurance, and debt are typically fixed costs which mean they don’t vary every month.

Budgeting Tips

For more budgeting tips including, how to create a budget, check out the video above. In it, I describe how I create my monthly budget which only takes me 5 minutes at the beginning of every month. A new trend in budgeting is to create both an annual budget and a monthly budget. The annual budget will help you prepare for things like birthdays, anniversaries, vacations, etc. The monthly budget will help you stay on track and not overspend on little things, that quickly add up.

Budgeting Apps

Several budgeting apps exist, the most well-known budgeting app is Mint. Mint makes it easy to budget because you link it to your bank account and viola! Your spending will automatically be tracked within the Mint app and since it is on your smartphone, you can easily access it anywhere you go. My personal favorite is the EveryDollar app, it was created by the well-known financial expert, Dave Ramsey. With the premium version, you can link it to your bank account, but I prefer the free version. With the free version, you have to manually enter in every transaction.