Establishing a budget doesn't need to be an uncomfortable experience. Once the basic elements are in place and you become familiar with the process, you'll be pleasantly surprised at how easy it will be to manage money.

I've created a spreadsheet on the reversed budget methodology, which you can find under the resource links at the bottom of the page to download and follow along.

The first step in setting up a budget is determining your net income and expenses.

Identifying Your Net Income

If you are an employee, your paystub will show your net income monthly, semi-monthly (every two weeks), or bi-weekly (26 paychecks per year). For bi-weekly, multiply your net paycheck income by 26, then divide it by 12.

If you have a variable income, you can refer to episode 36, where we covered that topic.
For including a spouse or significant other, follow the process above, then add their monthly net income to yours.

Identifying Your Net Expenses

Many of my clients start to pick up a lot of momentum in the stage I call “Wants versus Needs”.
On the spreadsheet, you will see five expense sections:

• Fixed Needs - an expense that comes out of your bank account regularly, like your home mortgage, a car payment, or a utility bill
• Fixed Wants - food, clothing, and entertainment
• Debt Payments - credit cards and personal loans
• Variable Wants – dining out, and vacations
• Variable Needs – costs that vary or are unpredictable, like car repair and medical bills

At the end of this stage, you will have separated all of your needs from your wants and identified all your debt payments in one place, which will help you understand how to balance your spending and help you diagnose areas where you can improve.

Resources:
Link to my Google Docs Budgeting Spreadsheet (click here)
Managing a Variable Income with an ADHD Brain - Episode 36 (click here)

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