One of the reason people often cite for not make a budget is the time it takes to create one. You don’t want to miss out on the immense benefits a budget offers just because it takes time? However if you are not ready to put in the time to create a budget from scratch, I am going to show you how to create a budget in about five minutes.
We will use a template and some guestimates to cut down the time you have to invest in making a budget. On an ongoing basis, this budget will take even less time to manage.
Make a list of all your income sources from your pay check, assignments, freelance work and investment income like dividends, rental income if any. This should take you under a minute to accomplish using the template. You don’t have to be through here. Making a budget is not about getting the last dollar right, it about making a financial plan that puts you in the right direction.
Not down all your major recurring expense like rent or mortgage payment, electricity and gas bills, phone bills. To these add your other expenses like entertainment, education and other expenses based on your personal situation. Be sure to note down all major expenses. Based on the amount of guesses you have made, add an ‘other expense’ section to the list and make an allocation for miscellaneous expenses. Writing down expense is one of the two places it generally takes people most time but if you make these simplifications, you should be able to cut down the time it takes to two minutes at most. The template already has sections for you to fill out most common expenses. If it takes more time, you are not simplifying enough.
Spend the next minute making allocation for saving, which you can later split in to retirement accounts, brokerage accounts and allocations for your long term goals. Trying to get the allocation right for all account is not the focus of our five minute budget. We want to get a high level view of how the coming month will look from a financial perspective. We can add more details and enhancements as the month progress, but the five minute budget should serve as a good starting point.
In the next minute or so, combine all the components – the cash inflow, the expenses and the savings allocations. You should try to balance out the cash inflow (all income sources) with savings and expenses. So if you have a cash inflow of $5,000 this month, your savings allocation and expense allocation should add up to $5,000.
Are you willing to commit five minutes in your financial future? Have you made a budget before? Did you meet your budget targets? Where do you spend most of your time in making a budget?
Please let me know in the comments section.
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