Create a Budget: Step 7b

The first step to financial health is to create a budget. Here are some mini-bites to begin creating a budget that works and you can live with.

There's money left in your budget after subtracting The Essentials, Debt Minimum Payments, and The Extras. I'm addressing this here because we cannot move forward until every dollar in the budget has a name. Can't have money "just floating around" there or it will "just float" on out of there.

You will allocate the leftover based on this:

1) "We have debt."
The extra will go to an emergency savings account until the balance is $1,000. (If your income is $20,000 or less, save until the balance is $500.)

2) "We have debt and already have $1,000 in savings."
The leftover will go toward your smallest debt.

3) "We have no debt."
The extra will go to an emergency savings account until the balance is $1,000. (If your income is $20,000 or less, save until the balance is $500.)

4) "We have no debt and already have $1,000 in savings."
The extra will go to an emergency savings account until the balance is equal to 3-6 months of expenses.


Have money leftover and your scenario is not listed above? Leave the question in the comments section.