Budget 1 | Budget 2 | Budget 3

Now you should have all your income and all of your expenses for one month. Now it’s time to start telling your money where to go.

Getting Detailed

To really start getting detailed, you need to ask yourself what the main purpose of your budget will be.

If getting out of debt is the main reason, then the emphasize should be placed on using as much money as possible to pay down debt.

If retirement, investing or saving is your motivation for a budget, then it should be geared towards exactly that. Having strong goals will help you stay on track with your budget.

Setting Every Category

You have discovered where your money goes in Budget 1: Getting Started. For many people, it doesn’t go where they want it to go and they didn’t know it went where it goes.

Did you follow that? I almost lost myself.

Now you need to decide if that is really where you want your money to go. When you are looking at the “eating out” category, for example, and you realize that you spend twice as much as you may have guessed, it may be time to set some limits.

Go through every single category and decide if you could spend less.

If your goal is debt reduction or investing, then you probably have more to contribute than you thought. Cutting down these other categories is only temporary until you reach your goal! If you want to be able to more freely spend money later, you may have to cut back for now, but, say it with me: it’s only temporary. You can do this for a short period of time and I promise it won’t hurt too bad.

Extra Money

There are all kinds of ways to add more income to your budget, but remember that cutting costs is usually easier and more effective than adding income.

Accomplishing a large financial goal usually has more to do with the money you spend than the money you earn. Sometimes you have to do whatever it takes to accomplish a serious financial goal like becoming debt free or retirement. Moving on…

A side job is a great way to make some extra income temporarily to accomplish a goal. Some of the best jobs for this purpose include waiting tables, delivering pizzas and paper routes. These are jobs that shouldn’t take a lot of extra time and responsibility, but produce a decent second income. Once again, a second job is usually only temporary. Selling your old stuff on eBay or CraigsList is also a great way to earn some extra cash to put towards you goal!

For budget worksheets and more, check out the finance resources page.

Budget 1 | Budget 2 | Budget 3

Budgeting Tools We Recommend

Personal Capital: Track All of Your Spending in One Place
Goodbudget: Track Your Spending With the Digital Envelope System
Mint: Connect Your Accounts and Automate Your Budget