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The secret to saving more and spending less every month isn’t a secret at all — it’s a budget.
We developed a 5-step plan to help you create a personal budget and stick to it over the long haul. The CLARK Method and our free budget worksheet will put YOU in control of your money:
“A lot of people look at being told to do a budget as if their life is being restricted. But the whole idea of budgeting is freeing because you’re getting your life under control, creating more choices and reducing anxiety,” money expert Clark Howard says. “Tracking what you’re spending and then seeing where you can make changes in your life is powerful. This is about giving you power back into your life.”
Making a monthly budget for the first time may seem overwhelming, but it doesn’t have to be complicated. After the initial setup, it’s really easy and doesn’t take much time.
To help you get started, remember that budgeting is as simple as C-L-A-R-K:
Read on to learn about the five steps to a successful budget and download our printable worksheet (PDF file) below to start budgeting the Team Clark way!
The first step is to figure out how much money you’re bringing in every month. This includes your take-home pay (your paycheck after taxes and other deductions) and any other sources of income.
Maintaining a budget can help you make sure that your income exceeds your expenses and allows room for retirement savings.
Next, write down a list of your expenses. Start by going over last month’s statements and recording your bills by budget category: mortgage/rent, groceries, cell phone bill, etc.
You also want to budget monthly for annual or semi-annual expenses so that you’re not surprised when those bills are due.
For example, if you pay a $600 auto insurance premium every six months, set aside $100 every month and keep it in a savings account until your next payment.
Consider setting up automatic transfers from your checking account to your savings account for these irregular expenses.
Now that you know how much money is coming in and how much money is going out, plan how you’ll spend your dollars. This step is about setting realistic monthly goals for every budget category.
Using our printable worksheet below, set spending limits for your budget categories and highlight areas where you can cut costs.
We’ve made this worksheet into an editable PDF so you can customize your budget to track expenses and calculate your savings (or overages) every month.
Click here to download the CLARK Method budget worksheet.
When it comes to your budget, Clark believes that focusing on behavioral changes and not just the numbers can help you stay on track. Here are some of his ideas:
“You start where you start and you do building blocks. Don’t overwhelm yourself and look at trying to do everything all at once,” Clark says. “Get your expenses under control, free up some money and then the options start to become more clear about what you do with the money that you’ve managed not to spend.”
(If you need some ideas, refer to Team Clark’s guides to help you make more money and save more money.)
The only way to hold yourself accountable is to track your spending over time. There are many ways to record your transactions, from a simple Google Sheets spreadsheet to budgeting apps like YNAB (You Need a Budget). Here’s our list of the best budgeting apps.
Review your spending habits at least once a week to look for patterns and make adjustments to your budget as needed.
Finally, use any leftover money in your budget to reach long-term goals faster. Prioritize things like paying off credit card debt, building an emergency fund and maxing out a Roth IRA.
If you’re still overspending, don’t give up! Use the worksheet to address at least one spending category per month.
“Once you’re living on less than you make, there are no absolutely wrong choices. But there are some that may be better than others. You create the freedom and the choice simply by living on less than you make,” Clark says.
Tap here to download your copy of Team Clark’s free budget worksheet. Sign up for our newsletter to get more budgeting tips!
This post was last modified on December 19, 2023 3:00 pm
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