There is no better way to have a budget than to manage it. I know this sounds like work, and it is work. Budgets do not balance themselves. Someone has to sit down and keep the records straight. Over the years I have developed several ideas that work well in our family. So, gather your materials together and let’s get started.
List all family income that will become part of the budget.
List all obligations (what you owe), from the smallest amount owed to the largest.
Add all the obligations, then divide the total amount owed by 4.3 to accommodate the months with five pay periods. Now you know how much you will need to set aside from each weekly paycheck into a separate account. Draw from this account to pay your list of bills.
Of course, if your paychecks are biweekly or monthly, you will divide the bill total accordingly. We receive monthly government retirement checks. Therefore our budget is set up on a monthly basis.
Put together a Sliding Scale Payment Schedule. For example:
Sears $50. Pay $50 first month. It is now paid.
Penny’s $100.00. Pay $25.00 first month. Balance $75.
Visa $250.00. Pay $25.00 first month. Balance $225.
Furniture $500.00. Pay $25.00 first month. Balance $450.
Second month, apply $50+$25 to Penny’s bill. It is now paid.
Pay $25 on three remaining bills.
Third month, apply $50+$25+$25 to Visa balance of $200. Balance $100.
Pay $25 on two remaining bills.
Fourth month, apply $50+$25+$25 to Visa balance of $100. It is paid.
Fifth month, apply $50+$25+$25+$25 to Furniture balance of $400. Balance now $$275.
Sixth month, apply $125 to Furniture balance of $275. Balance now $150.
Seventh month, pay remaining balance of $150 on Furniture. It is now paid.
Viola! You paid off $900 in just 7 months!
Keep a Check Register so you know exactly where your money is going. Your bank will furnish you a free register. List all your bills on a Month-At-A-Glance calendar. Mark them when paid so you can see at a glance what has been paid and what is still owing. Plan your budget around your paydays.
A small hint is in order: Ask your bank if they will set up a bi-weekly weekly payment schedule for your mortgage or car payments, or any larger amount owed. This will save you several years of payments.
Our home mortgage is $40,000 on a twenty-year contract. By setting up biweekly payments with the bank, we will have the mortgage paid off in sixteen years instead of twenty.
Now that you have your budget up and running, set up a savings account and pay yourself first. Begin with $10.00 per pay, then increase the amount each pay, even if by $1.00.
Set a goal and stick to it: To become debt-free; to learn to live within my budget; to save for a down-payment to purchase a home, vehicle, etc.
