Lesson 6: Make a budget
We all had the experience where we just get paid, and all of a sudden we are fooled into thinking that we have so much money. Then, we spend this money freely, only to find out little expenses here and there add up to a lot, and soon enough, we see our bank account empty – or worse – in the negative.
The reason for this is because you don’t have a budget. A budget is basically a plan of how you want to spend your money. At the beginning of a budgeting period, which could be a month, six-months, a year, or whatever period that works for you, you sit down and decide how much you want to spend in each category of spending.
Once a budget is created, you will know how much you will spend overall, how much you will earn overall, where will all that money go, and most importantly, are you breaking even, saving money, or losing money in the end. This is like having a crystal ball into the future. Once you create a budget, you can forget about money for the rest of the month, six-months or year.
So going back to that initial example of how it feels when you just get paid. If you create a budget, you will soon realize you really don’t have as much money as you feel you have. Because all these money need to go toward some category in your budget. By having an accurate budget, you can rest assured knowing you only spend what you should spend to reach your financial goal.
So, let’s watch this video to see how budgeting works in GreenBooks. If you’ve used envelop budgeting software like You Need a Budget before, you will recognize that GreenBooks is a lot simpler to use and just as – if not more – effective.
In this video lesson you learned:
- What a budget is
- How to create one in GreenBooks
- The difference between a monthly budget, multi-month budget, annual budget, and how to choose between them
- How to track your progress as time passes
- How to “roll with the punch” and adjust your budget as life situation inevitably change.
Remember, with the GreenBooks Method, budgeting is an optional step. If you feel you already have great control of your money with the insightful charts that GreenBooks has (Breakdown and Trends). However, if your money is tight, it’s crucial that you create a budget.