How Do I Start the First Month of a Budget?

[weifert]

A lot of really dumb questions are about to happen.

So I'm 24...haven't actually made a budget in my life. But I'm starting now, so that's something.

I've added up all of the debt and expenses, planned out the spending. Only problem is, how do I start the first month if I'm paying from the last month?

I mean I get that in a budgeted month you build up the funds to pay this bill or that, but how do you get started if you're still trying to pay last months stuff? It seems like it's impossible to actually start the budget.

Somebody help me please!

[snafu]

I know it seems difficult but for the short term...you need to spend less than you earn so that you get to a positive cash flow. If you set out your categories, sums to be paid and interest rates, we can offer tangible help. There are several goals to get you in control of your money rather than the money controlling you!. For example, it helps to get 'Needs' category to 50 % of net income. That covers basic expenses like rent, utilities, food, transportation etc. 40% covers Wants which may be items you've bought on credit using anticipated future earnings. It often includes clothes, entertainment, restaurants, travel/vacation. The final 10 % is savings.

One of the Blogs outlined an easy peasy starting point for allocating income vs expense

http://lookingforward.savingadvice.com/2013/09/07/easy-low-tech-calendar-budget-system_104637/

I hope the link works.

You might need to cut back variable expenses for the short term but even if it feels awful for a couple of pay cycles it's short term pain for long term gain. We recommend starting by creating an Emergency Fund, minimum $ 1,000. and build to 3 months basic expenses. It's crucial to know the interest rates you are paying on credit cards, auto loans, student loans etc. This isn't easy but helpful to add up how much of your money went off in interest payments only...didn't touch the principal sum of item purchased.

I look forward to your next post with specific information. I'm confident you can fix your cash flow.

[kork13]

There are two separate issues here.... monthly cash flow and spending/expenses in accordance with your budget. Just because you're still paying the bills from last month (presumably from your credit cards?), that doesn't mean you can't start spending what you're supposed to do according to your budget. I think of my budget more as a "spending plan", where I plan to spend *this much* on *that category* of stuff. Just start spending according to your plan, and catch up your cash flow as you can. Just because you have a bill due from last month doesn't stop you from reducing your spending on groceries, or clothes, or eating out. Live according to your budget (you spending plan) starting today, and as time goes on your cash flow will catch up.

Side note as an option, if you have some savings available, you could use some of that to quickly reset your cash-flow, which if you implement your budget at the same time, should immediately synch up your spending with your cash flow.

[dojo]

You are already doing something good: being concerned with a budget and willing to change your ways.

I have found out that it's easy for me to keep a 'spending journal' (you can use an excel spreadsheet, I personally use AceMoney - it's a nice PC program that does it for me) and see what you're spending on and what you can cut off from said spending.

Having planned a budget is really great, you can have a clear view on what expenses you'd normally incur in a month,but the spending journal also helps you notice what your money gets spent on. With these 2 batches of information you can slowly make adjustments, clear off the debt and optimize your cashflow even more

[ideasonfinancing]

The first thing to do is to balance the equation. You have to minimize your expenses on entertainment and hobbies and maybe even food to settle last month’s bills. So far, you are still behind your budget timeline but once you have settled your bills through your savings, then, you are already on the right track. It is hard at first but it is fulfilling.