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Budgeting… something most of us think we do, but a majority of us don’t actually commit to. In a perfect world, we would all have enough money and have our needs met so we wouldn’t have to struggle to survive. Until that faithful day arrives, most of us will have to learn to manage our funds in an attempt to live fruitfully. I’m going to breakdown budgeting preparation into five easy steps to help you organize your life and experience more!

#1: Calculate

Your first step is to calculate your monthly income after taxes are withdrawn. This is referred to as your net income. (Gross income is the total you earn before taxes are taken out.) If you’re not salaried, this can be a tad tricky. However, it’s not impossible to calculate this if you’re paid hourly or based on commission. Once you have this figured out, write this number down on a piece of paper.

#2: List

On the back of that piece of paper, make a list of everything—I mean everything—you pay for each month. These are necessities such as rent, groceries, insurance, utilities, loans, car payments, etc. and miscellaneous items like gym memberships, subscriptions, hair appointments, and anything else you can think of. It doesn’t matter how much or how little the expense is: write down anything and everything that you pay for each month.

#3: Record

Now that you made a list of monthly expenses, record the dollar amount of each item. If the monthly expense tends to fluctuate every month, write down the highest number that expense has ever amounted to. When writing down these numbers, round up to the nearest whole dollar. For example, if your rent is $1,000.99, you record rent as $1,001.00.

#4: Total

Take out a calculator (or do it by hand if you’re feeling inspired!) and total all of the monthly expenses you just listed. Make a box around this number.

#5: Compare

The final thing in preparation to begin budgeting is to compare your monthly net income to the number you just boxed. Is the boxed number lower or higher than your monthly income? If it’s higher, there’s a problem. If it’s lower, that’s a good start!

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Take a break! Organizing your life is difficult, but can be managed by taking small steps. Budgeting prep is the tip of the iceberg when it comes to managing your money.

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