Online Dating Magazine > Self Improvement > How to Create a Budget

Creating a Budget:
Eliminate Paycheck to Paycheck Problems
by Joe Tracy, publisher of Online Dating Magazine

According to the USDA, the majority of Americans report living paycheck-to-paycheck. And you'll likely find that this same majority has something else in common - they don't have a budget.

People who live paycheck-to-check often say something like, "I can't afford to have a budget because I don't have enough money to budget" when the truth is that they can't afford not to have a budget. Budgeting your money is what allows you to have enough of it.

Creating a Budget - How to Do It
Creating a budget isn't hard and after getting used to it, the process of tracking and saving actually becomes fun and inspiring. I know, I've been there, and it is amazing how after creating a budget I went from living paycheck-to-paycheck to having savings, an emergency fund, a home deposit fund, and even a dating fund for my online dating adventures. I found my stress level was greatly reduced because I never worried about how the next bill was going to be paid after I had my budget going.

Here is a five step process to creating a budget:

Step 1: Stop Making Excuses and Start Taking Action
No more excuses. Think positive. Now is the time to start a budget and change your status at the same time. Think of it. One year from now you'll be looking back proud of what you've accomplished. You'll feel great knowing that you're no longer one of the Americans making excuses for not making a budget. Do it. Close your eyes for a second and picture yourself in a year living much better because a year earlier, today, you decided to start budgeting.

Step 2: Devise the Budget
If you have a data or spreadsheet program like Excel, devising your budget will be easy. In fact, I've created a generic Excel budget that you can download and use to create your own (click here). You'll notice that it includes an online dating fund. ;-) This budget assumes that you get two paychecks a month. You have budgeted items for paycheck #1 and budgeted items for paycheck #2. For those who don't have Excel, here's an image of the sample budget:

As you can see, the list is in checklist form so that as you get your check and pay each bill, you can check it off. You also have items dedicated to your first paycheck of the month and items dedicated to your second. This way you are always executing your budget as money comes in. Notice there are things like Christmas, New Computer, and Gifts budgeted. That's because from now on you're going to pay cash for all of these.

Step 3: Use Manila Envelopes
Purchase small manila envelopes. You will use manila envelopes for cash items like Food, Toiletries, etc. On each manila envelope, write the name of the cash item on top (i.e. "Food" or "Online Dating"). Now add a check list line then write the current month. Under it add another checklist line then the next month. Keep doing this until the rest of the year. Every time you put the amount in that envelope for your month's budget, check it off on your envelope and check it off on your budget. For specialty items, like a computer, add three more lines, like below:

After the general checklist line and month that you have on all your envelopes, you'll add three more lines to specialty item ones like "New Computer". When you put the budgeted amount in, check it off and write the amount on the first line. The second line is for any extra money you may have that month that you want to contribute. Let's say you got a bonus check in March and contributed $120 extra to your "New Computer" fund. You would put the money in the envelope, then add it to the second line. The third line is for your running grand total. When you get to the required amount for the new computer you want, walk into the store and pay cash for it! I did this method with my last computer and felt great about it.

Step 4: Use an Online Savings Account
There are some reputable and specialty online managed savings companies, like ING Direct, that make it easy to create accounts and save your money online. You can create as many accounts as you like and name them whatever you want. I have an ING Direct account where I keep a lot of my funds (see image below). Because your money isn't easily accessible (once it is deposited, it takes 2-4 days to withdraw from your account), it makes it easier for you to save (or "forget about") that money. In the meantime, every penny you put into it builds at a much higher interest rate than bank savings accounts. Research reputable online manageable savings companies and select one to manage a lot of your budget items.

Step 5: Stay Consistent
You may find you have to make changes to your budget the first couple of months to account for things you may have originally missed. This is normal. Just make sure that, no matter what, you stick to the program. Resolve to pay cash for everything and to put a reign on your impulse spending so that you can have an awesome future. Soon the program will become habit and every month you'll glow at seeing some of your accounts accumulate money that you thought you never had.

Creating a budget also curbs the habit many Americans have of raising their lifestyle to match a raise so that they are living paycheck to paycheck again. You won't do this. When you get a raise, you'll simply increase items like "Emergency Fund" and "Home Deposit" in your accounts and watch them grow even quicker! You'll also enjoy watching the interest grow every month for each of your accounts.

Your success with managing your money starts right now.