Budgeting Is Fun! Kidding.

Think of your budget NOT as a punishment, but as a record of where your money is currently being spent. In this way, you’re recording your current reality.

Unless you have the facts in front of you, you won’t be able to assess whether a change is warranted. Nor will you be able to assess whether your money is being spent on your top priorities.

A budget helps you see the steps needed to reach your goals. It also helps you map out those goals, save your money, keep track of your progress, and make your dreams a reality.

It’s going to hurt when you realize something you want to buy or experience doesn't fit into your budget. But when you remind yourself that your budget has purpose, it will be much easier to exercise discipline.

A budget helps you identify your essential expenses, telling you how much to have in your emergency fund.

It helps shed light on spending habits. Taking a close look at your spending habits may reveal that you're spending money on things you don’t even really value.

A budget gives you control over your spending so you can work towards your financial goals.

Here’s how to create a budget.

1. Start with your automatic debits.

Record the name of the bill, the actual and then the average amount of the bill for the last 6 months. Extra points for recording the date of the monthly debit so you can keep track of the timing of ‘when you need what’ in your bank account.

2. Then move on to your credit cards (use the same spreadsheet, but separate section).

Categorize the items you charge to your credit card to the detail that suits your situation. Perhaps you only need a few categories: Groceries, Restaurants, Transportation, Personal. Or maybe you want to drill down and see where your money’s going in detail: Work Clothes and Shoes, Sports Gear, Groceries, Amazon, Alcohol.

3. Within both the debit and credit card sections, separate into two categories: fixed and variable.

Fixed expenses are not likely to change without notice. These are expenses like mortgage payments, membership dues, subscriptions, and insurance premiums.

4. Now, within the sub-sections, separate into two more categories: essential and discretionary.

You’re going to have fixed expenses that are essential like your rent or mortgage and those that are discretionary like your monthly yoga studio membership. And you’re going to have variable expenses that are essential like groceries and those that are discretionary like meal delivery.

Find an item to cut, and give yourself an action plan to make calls to cancel, eliminate, reduce, whatever it takes.

Do this for a month and tackle a few things that are not too painful. Fun times.