Many individuals and families find setting a budget to be a daunting task and can’t seem to keep a budget intact for very long. The key to not feeling trapped and bossed around by a spreadsheet is to consider it a ‘spending plan’. YOU get to determine where your money goes! Spend your money by CHOICE, rather than by CHANCE! Your spending plan is as alive as you are, and it needs to change and adapt with you.

Include some fun activities and ‘blow money™’ into your spending plan. That will keep it from feeling like a cage. You get to control your financial destiny. Knowing that your financial life is headed in a positive direction will keep you motivated.

Every dollar of income needs to be held accountable for some task. This way, your budget can change and be as flexible as you need it to be – ALWAYS be in charge of your budget.

Let’s start by talking about the Four Walls™. These are the basic necessities you need in order to live, protect your family, and be productive when you go to work. The Four Walls™ are food, shelter and utilities, transportation, and clothing. When you consider your absolute basic needs, you want to make sure that:

• everybody has food to eat
• you live somewhere you feel is reasonably safe, the electricity and water are running, and the house is appropriately warm or cool
• you have transportation to take you and your family to work or school
• everybody shows up (to school or work) wearing appropriate clothing

On the Budget tab of your spreadsheet, enter these items. They are your basic expenses:

• Food = Estimate your monthly grocery budget. This does NOT include anything else that you purchase at the grocery store unless it is a food item. Don’t include your eating-out budget. If you have no idea what the grocery amount is, simply log into your bank account and tally up these purchases for the last 3 months to create a monthly average. (Mint by Intuit is one free app to try.)
• Shelter & Utilities = Mortgage/Rent/HOA; Water; Gas; Electricity; Garbage
• Transportation = Car Payment/or Monthly Commuter Pass; Car Insurance; Monthly Auto Gas; Monthly Maintenance; Monthly Parking Fees (mandatory parking or garage fees for work, if not reimbursed, and/or home)
• Clothing = This one can be a little more difficult to track. Just estimate it for now.

You probably already know the amount of your fixed monthly expenses. You make the same rent or mortgage payment every month. You make a car payment, and/or you buy your monthly commuter pass. You can start by writing down what you think you are spending each month. You might know what you spend on auto insurance and on your cell phone plan, but to start, you will literally be guessing at some of these other numbers. That’s OKAY! Just go ahead and pull all that information together with your best estimates. In two or three weeks, you’ll have more realistic numbers. You might be already starting to see areas where you can cut back. We’ll get to that, but to start, we’re going to work with your budget as it is right now.