1. Know the Rules for Successful Budgeting.

Before even beginning to create your budget, You Need A Budget is a firm believer in knowing the rules. More specifically, the "Four Rules for Successful Budgeting". Though YNAB provides you with a plethora of tools to get you started with a finely-crafted budget that speaks to you, your life, and your budget, they pack more of a punch in conjunction with these simple but transformative rules to budgeting.

1. Give Every Dollar a Job: Allocate the money that you earn to specific needs, wants, and nice-to-haves in accordance with your personal budget. It's the difference between seeing an extra $100 in your account and blowing it immediately on food or clothes, and redirecting that "extra" cash someplace that will add more value to your financial goals overall.
2. Embrace Your True Expenses: Instead of feeling overwhelmed by infrequent expenses, plan for them and treat them like a monthly "bill". This means your car breaking down, your annual birthday trip, and/or Christmas presents for everyone at the end of the year won't feel like such a blow to your finances. Instead, they are funds that you have added to in increments to fund throughout your year.
3. Roll with the Punches: Don't feel pressured to stick to your budget to the T, instead be flexible and make adjustments where needed. For example, if you had a grocery budget of $200 for the month, but it ended up being $300, it isn't the end of the world or your budget. Instead, it just means being creative about making a necessary adjustment in another category to accommodate the overspending in one.
4. Age Your Money: Perhaps one of the most important rules in the rule of four, this rule refers to being more intentional about the way you spend money through the goal of getting a month ahead. By doing the other three rules that were mentioned and spending less money than you earn, over time you are setting yourself up to be able to use your paycheck from the month before to cover expenses for the current month. The beauty in this is that by allowing your money to "age" and stay in your account longer, you are lessening the financial burden of feeling like you are living paycheck-to-paycheck.

2. Choose a Tool to Create Your Budget

Perhaps just as important as implementing YNAB's aforementioned budgeting rules is choosing the right tool to create your budget. Do you want to go old school and track your expenses manually on pen and paper through bullet journaling? Do you want to crunch numbers through an Excel spreadsheet or a Google Sheet? Additionally, there are online methods that allow you to create your budget like Mint.com as well as banking institutions that typically have a "free" option built into your accounts.

Another favored option for creating your budget is the ease and use of apps as a budgeting tool. Apps like You Need A Budget allow users to create and customize a personal budget at their fingertips while allowing you to stay up-to-date with your expenses in realtime, no additional legwork or calculations needed. Once you figure out the framework you wish to utilize in order to meet your budgeting needs, you can officially start filling the blanks in creating your budget.

3. Note Your Monthly Income.

You can't begin to track or allocate what goes out of your account month to month without having a clear understanding of what you bring in each month. You can figure out how much you make each month by reviewing your bank statements or pay stubs and calculating what's been deposited. For people with a traditional employer, this should be relatively easy. Also make note of anything you earn from side jobs or passive income streams you might have.

4. Write out Your Monthly Expenses.

Keep stock of your monthly expenses by writing them down. Truthfully, a lot of us go through each month, and spend what we have until we're back at 0 without much knowledge or understanding of what our expenses are and exactly how much we're spending each month. Use a personal budgeting app like You Need A Budget or analyze your bank statements for a span of three months to gain insight on your spending habits over a period of time. Your monthly expenses may include:

• Rent/Mortgage
• Cell phone
• Eating out
• Debt repayment/student loans
• Credit card
• Groceries
• Car note
• Car insurance
• Gas
• Utilities
• Streaming services
• Internet
• Savings
• Travel
• Clothes
• Pampering
• Personal grooming (hair, nails, wax, etc)
• Misc

5. Create Sub-sections for Fixed Expenses and Variable Expenses.

Fixed expenses liked rent payments or mortgage payments, utilities, car payments, student loans/debt repayment, and/or childcare are expenses that don't change month-to-month, so you can write them down with confidence, knowing that the payment for these expenses are "fixed" each month. Examples of this include:

• Rent/mortgage
• Utilities
• Student loan/debt repayment
• Credit card
• Car insurance
• Health insurance
• Car payment
• Emergency fund

In contrast, variable expenses vary each month, and though you might be spending money on the same kind of expenses monthly (i.e. food, shopping, entertainment), the amount you spend changes each month. For example, you might go from spending $200 on eating out one month, $150 the next, and jump to $400 another month. That being said, expenses like groceries, eating out, entertainment, shopping, and gas tend to fall in this category.

In your budget, assign a dollar amount that you want to act as your threshold for how much you will allow yourself to spend for the month.

6. Adjust the Budget Based on Your Needs.

Based on the numbers you've spent in all of these areas over a span of three months, acknowledge what you're spending on each category and, based on your monthly income, adjust where needed. You might find that after all of your wants and needs are written down in front of you, you actually have a surplus of money left over which actually invites you to reallocate those funds elsewhere (like putting more money onto your debt repayment or your emergency fund, for example). This will help better provide you with a baseline and a foundation for tracking your expenses.

However, if you discover that you're spending way too much money, it might mean adjusting your variable expenses to better accommodate your fixed expenses without leaving you in the red or your bank account overdrawn. Likewise, you might also consider finding ways to increase your income.

7. Add in Your Wants.

Now that we've more than covered your needs, it is important to make room for your wants. We are not machines and it does not make sense to create a budget that focuses so much on needs that you forget to give yourself some wiggle room to use the money you earn on yourself here and there. Most importantly, where it makes sense.

Adding in your wants looks like including room for "treating yourself", budgeting for those shoes you've been eyeing even if it means putting a little money away for four months until you have enough to buy it, or a monthly facial or massage. Whatever it is, make sure you budget for it, so that when whims pop up, it doesn't obliterate your bank account in the process.

For more information on how to make your financial dreams a reality or how to create your own personalized budget, visit You Need A Budget today.