If you haven't checked out Part 1 yet, click here to get up to speed.
Hopefully, you've had a chance to start tracking how you are currently spending money. I always recommend doing this first, so you know exactly where you can afford to spend more and where you need to cut back.
Before we jump into the content for this week, download and print my Monthly Budget Tracker so you can keep all of this information in one place.
First, record your starting numbers at the bottom of the page: your projected monthly income, your current savings total, and your current debt total.
Pull out your expenses list from last week. This should tell you how much, on average, you are spending in each category. Total up each category, and compare this number with your projected monthly income. Jump down to the heading that describes you.
Using the Monthly Budget Tracker, write down only your non-negotiable expense categories, such as mortgage/rent, car payment, utilities, groceries, etc.
Fill in how much each of these cost, or in the case of variable expenses, like groceries, use your most recent average.
Add up how much total money you need to budget for these essentials. Then subtract this number from your projected income to see what you have to work with.
Out of what is left, determine how much money should be allocated to building savings and paying off debt. During these uncertain times, I recommend putting at least a little bit towards your savings regularly.
If possible, try to keep a little money leftover for fun activities (even if they're cheap!) and unexpected expenses. It's important to have a little fun when everything else is so stressful.
The goal here is to reduce or eliminate the spending you were doing in non-essential categories. Prioritize your non-negotiables, savings, and debt-payoff.
Using the Monthly Budget Tracker, write down each expense category (don't fill in any numbers yet). Start with the non-negotiable categories first, such as mortgage/rent, car payment, utilities, groceries, etc., and then fill in the others.
Then, use the averages for each category to create your budget. For non-essential categories, see if this number can be reduced.
Determine the total amount of money that you are able to save in each category, and budget that money to go towards savings instead. Even though you are spending less than you make, it's more important than ever to further build up your "rainy day" fund.
Be honest with your tracking! That's the only way to see if your budget is working and if you need to make any adjustments. Tweak as you go along!