Every one of us has been there. You still have several days until payday and the money is gone. Being broke sucks. Having too much month at the end of the money is discouraging when you work hard and can’t get ahead to make ends meet.

This troubling phenomenon of being broke is not the product of gnomes sneaking in and stealing the money you have hidden in your mattress. This is a direct result of poor planning.

Sooner or later we all reach a place where we have to take control of how we manage our money and accept that we need a budget to keep us in line.

You can continue to hope that you are the heir of a long lost oil tycoon’s fortune but you shouldn’t hold your breath.

Budgeting is NOT Rocket Science

A budget is a simple accounting of Income and Expenses that you create BEFORE the month begins.

There are great free apps for budgeting but if you are making your first attempt at creating a budget, let’s just keep it simple and grab a notebook, a pencil, and a calculator (because math is hard).

This notebook approach isn’t technical or sexy but it will get the job done and what you need is a starting point.

First: Write down all of your anticipated income for the month: salary, tips, refunds, and even the money you are making on eBay selling your Star Wars figures. All of it. This is the total amount of money you have to spend for the month. It is not negotiable; you can’t spend money you don’t have. We are going to work from a Zero-Based Budget Approach so you will spend every penny of that income on paper before the month begins by assigning it to an Expense Category.

Second: Write down all your expenses for the month beginning with Fixed Expenses: housing, transportation, insurance, and utilities. Then write down all your Variable Expenses: gas and food. Now write down your Debts: loans, credit cards, and other debtors. Finally, we are going to write down the category that wreaks the most havoc on your pocketbook, your personal spending. Your Personal Spending Category will include savings, eating out, entertainment, online purchases, gift giving, personal care, and blow money (or whatever).

Do the Math (it’s okay, use the calculator)

You can see from your Income exactly what you have to spend for the entire month.

• First, deduct your Expenses beginning with the Fixed Expenses – these are must haves – you have to have a roof over your head.

• Next, deduct your Variable Expenses – these again are must haves – you will need to eat and get to work.

• Then, deduct your Debts – like it or not you have to pay the bills.

• Finally, take a look at the amount left over from your income after you deduct Fixed Expenses, Variable Expenses and Debts. This amount is what you have available to spend in your Personal Spending Category once you spend it in your Personal Spending your budget should have a zero balance.

Personal Spending

For most people, Personal Spending is where it all falls apart. You grab a coffee in the morning, a sandwich at lunch, buy a new app on your phone, meet friends for drinks after work and at the end of the first day…you’ve spent $30 you hadn’t expected to spend. Doh!

Multiply that across 30 days in the month and the great mystery of “Where did all my money go?” is solved.

You have to become intentional about your spending, and using a budget to know what you have available to spend is the first step. Yes, adulting is hard, but sooner or later we all have to do it.

To allocate within this category, start with what you know you must have for the month: a gift for your sister’s birthday, money to go out with everyone for the going away party – deduct those first and then spend whatever is left in your other Personal Spending Categories – savings, entertainment, eating out, online purchasing, personal care, etc.

Don’t ignore Saving. Saving is how you pay yourself. Even if it’s a small amount save something.

Good News, Bad News

Knowing what you have available to spend is half the battle and that is the Good News, but here’s the Bad News, it’s not the hard part. Sorry cupcake.

The hard part is having the personal discipline to tell yourself “NO.” We don’t like no. We want what we want, when we want it. But how’s that working out for you?

If you have creditors calling, if you are living on credit cards, and money or lack thereof is stressing you out, what you need is to some self-discipline. It’s easier to avoid self-discipline in your personal finances when you don’t really know where you are going wrong.

Having a budget removes the excuses and makes you accountable to yourself. It’s time to stop complaining about your situation and start taking control of it.

Create a budget now – paper, pencil, calculator… go!