Many people think that budget is a bad word. They think it’s a restrictive list of “do this” and “don’t do that.” Are you one of them? If you are, I want to challenge you to change the way you think about what the word budget actually means.

Simply put, a budget is a plan for your money. When you plan how to save and spend your money, you are able to live life on your terms. You can choose to spend money on things that you value.

If you don’t have a budget and are just trying to survive, you most likely spend money on the next pressing need. If you don’t plan for future needs, chances are good that you will not be able to pay for an unexpected expense such as a car repair or have savings set aside for a sudden loss of income. Life happens. It’s best to plan for it and budget your money accordingly.

So what does that mean in practical terms?

In order to create a budget, you need to know 2 things – your income and expenses.

First make a list of all of your expenses for one month. Include everything from rent/mortgage and utility bills to smaller expenses like toiletries, clothes, and toys. When you track expenses, you can estimate accurate figures for expenses that change from month to month such as food and gasoline.

You can track your expenses using a pen and paper, spreadsheet, or an online budgeting app like Mint or EveryDollar. If you start with one method and decide you’d rather switch to something else, that’s fine. It doesn’t matter what method you use. Pick one that works for you and that you will stick to so that you can maintain it over time.

Next make a list of all of your income after taxes. Once you know what you have to work with, it is easier to come up with target budgets for different spending categories.

After you know what you make and have an idea of your expenses, it’s time to construct your budget. Your budget can and should be changed over time as your life and needs change.

You might start off with a much higher spending limit in one category and then realize that you don’t need to allot so much money to that category. Or you might find the reverse to be true and change your budget figures so that you can increase your spending in an area.

So what does a budget actually look like? It’s really just a list of categories and numbers. If that makes you yawn, remember that a budget is a plan to allow you to save and spend on things you value. If you want to take a vacation in the Caribbean or buy a house or a car, it’s important to budget for them. Keep your goals in mind as you create your budget so that you don’t get sidetracked or lose motivation because it’s “boring.”

As you create your budget, it is important to set aside categories for tithing (charitable giving) and saving. Pay God first, then yourself, then everyone else. If you try to pay everyone else first and then save what’s left over, you will find that there is usually nothing left over to save. Set aside your savings first and then stretch your remaining income to cover your other expenses. If you are serious about saving and adopt this method, you will find ways to make your remaining income cover your expenses.

Let’s look at an example budget.

Monthly Income before taxes – 2800
Monthly Income after taxes - 2000

Tithe 280
Savings 200
Rent 800
Utilities 100
Groceries 250
Car 100
Medical 25
Debt 75
Kids 100
Pets 35

This is a very simplified version of a budget to give you an idea of what it will look like. Your budget should have as many categories as you need. Make sure to include all loan payments, bills, and spending areas.

As you start to track your spending, you will see areas where you can cut down on expenses so that you can contribute more to savings or a goal. Many people spend a lot more money than they realize on restaurants and fast food. If you are trying to save for a vacation, take lunch to work instead of buying fast food. You will be pleasantly surprised at how much money you save.

Create a budget and take control of your saving and spending. Live on your terms and enjoy a fulfilled and abundant life.