We have all been there. You’re living paycheck-to-paycheck, and your monthly income has just been directly deposited into your bank account. You are excited about being able to enjoy some of your hard-earned cash! Of course, some of it will go towards living expenses and bills, which is to be expected. You also know in the back of your mind that you should keep a budget, but since you want to enjoy your life and have fun, you ignore it, hoping your finances will all work out by the end of the month.

As the month goes on, some budget leaks start happening, and it adds up fast:
• Habitual coffee orders that cost $3 to $6 each time

• Dining out and drinks with friends or your significant other

• Late night snack runs when you have a craving

• Tips for good service (servers, taxi drivers, food and grocery delivery, hairdresser, etc.)

• Impulse buys at superstores such as Target and Costco

These purchases usually happen with a mere swipe of a debit or credit card, and it can easily cost you up to $50-100 a trip, while you are left wondering what it was you ever purchased.

The reality is that making a budget isn’t all that hard but sticking to it feels nearly impossible! Sure, there are plenty of budget spreadsheets online to choose from, and most online resources insist that you need to have a strict budget to keep a tight rein on your finances. Even though this is true, why is it that 90% of us have no desire to categorize every dollar we spend and dread watching the money disappear from our account?

Because most of us want to enjoy a nice meal on date night, socialize with friends, go to a concert or amusement park occasionally, buy nice clothing or electronics we are obsessed with, and generally live a happy, fulfilled life. The trouble is that if we aren’t careful, not keeping a budget can result in crushing loads of debt that will force you to work years past retirement to compensate what you’re overspending —including buying on credit—today.

So, what’s the solution? Is there a way you can get on a budget and relax as you watch your savings account increase, knowing that your money is waiting for you to spend on whatever you want?

The simple answer is YES!

It is easier than you think, and here’s how it is done.

You first need to know where your money is going.

Use this simple formula: Spend < Make

You can also take these steps on how to create a budget and win!


This one may be difficult, but it’s an absolute necessity for a reasonable budget and a better life. Credit cards are a dangerous thing to play with. According to Dave Ramsey, “They don’t require as much space in our wallets, and we don’t have to think about actual dollars in our account when we swipe. Unfortunately, that also means it’s easier to overspend.”

Most Americans between the ages of 18-65 have $4,717 of credit card debt according to creditcards.com. Their interest rate is around 15% with a minimum payment of $189. Your debt will take a total of 10 years to pay off, paying a total of $22,869. This means if you are paying the minimum payment then you are paying a total of $18,155 on an underlying credit loan of $4,717!


You need to know how much money is coming in each month. This is one of the more satisfying aspects of creating a stress-free comfortable budget because you get to see how much money is coming in.

Write down every source of an income stream. The key is not to leave anything out—if you sell something on eBay or get a Christmas bonus, make sure you include it.

Income Source 1_______________

Income Source 2_______________

Income Source 3_______________

Figure out what your total monthly expenses are, including debt.

This part is not so fun because you are now seeing how much of your hard-earned money is leaving your pocket every month. The usual bills are not as eye-opening because you expect to pay things like your rent or mortgage. What is difficult are the little leaks in a budget that can lead to sinking slowly into a drowning sea of debt.

What we want to do is add up the total of all the money that has come out of your checking account and any money that you have used for additional purchases from the credit card for the month. We recommend separately recording the past three months of spending to analyze your spending habits at a higher level.

Total Expenses for the Month

Housing (rent, mortgage, including taxes and insurance.)

Total $_________________

Other Expenses (rent or mortgage payments, health insurance, utilities with fixed monthly payments, childcare, internet, cable TV, gas, clothes, eating out, groceries, includes expense leaks, etc.)

Total $_________________

Debt Minimum Monthly Payment (student loans, credit cards, personal loans, car loans, etc.)

Total $_________________

Add these all up to get your final total expense amount ___________


Total income – total expense = left over________

Now that you know how much money is left after the necessary bills, the next step is to determine how much you want to save. Where do you start? By writing down how much you can save each month. Just know, a little is better than nothing at all.

Start with this list of important things to help you plan:

• Emergency savings (“If you have debt, I recommend saving a starter emergency fund of $1,000 first.” Rachel Cruze)

• Saving for your short-term plans (Vacations, Christmas gifts, etc.)

• Long-term savings

• Retirement accounts

How do you take steps towards achieving your goals? The answer is knowledge.

It is crucial that you are aware of both your short-term or long-term goals. If you do not have a purpose for saving money, then it can be hard to see the forest through the trees.

Short-term goal example:

To have enough funds saved up for vacation cruise tickets in 3 months.

Goal = 2 vacation cruise tickets in 3 months

1 Cruise Tickets at $300 + 2 = $600

Save $200 a month X 3 Months = $600

Goal Reached!

You can use this calculation for any short-term and long-term savings goals.

Setting a goal with a financial commitment attached to it will help you stay disciplined and stop leaky budget spends. If you think about getting a coffee at Starbucks, you can first ask yourself, “Is this going to help me reach my goal?” If the answer is no, then do not spend the money.


If you don’t want always to be worried and wondering if you are going to make ends meet, then automating your income and costs is something you must do. Automation will help control your spending habits, so you can make sure you are staying on track to reaching your goal.

How does it work?

Make sure your income is on direct deposit.

Designate that your income each month be deposited directly to your checking account and savings accounts, respectively.

Make sure your consistent bills are on autopay each month (monitoring helps avoid any surprise expenses if rates increase on anything).

Use a set cash fixed amount for other living expenses (when you run out of cash, then you are out for the month).

Anything extra you can put towards your goals or spend on a fun activity!

In our current turbulent economy, budgeting is more important than ever. If you just drift aimlessly through life without a financial road map, throwing your money at every shiny new object catches your eye, how will you ever save up enough money to buy a car, take that trip to Europe, or put a down payment on a house? If you and your family want the financial security you deserve, sticking to a budget and saving for the future is the only option. The sacrifices you make now will be worth it in the end.


Schedule a free consultation today for a risk-free debt assessment. The only thing you have to lose is your debt.