If you have filed for bankruptcy, it is very likely that poor money management skills and spending got you there in the first place. Personal finance isn’t something that is normally taught in school—unfortunately, it’s mostly learned through trial and error. Sometimes those errors lead to bankruptcy. If this has happened to you it is nothing to be ashamed of—here are some ways you can budget after bankruptcy.

How To Make A Liveable Budget

First, it is important to understand that a budget isn’t something that is intended to restrict how you spend your money. Instead, it sets guidelines to show you a prioritized list of your monthly expenses so that all the important payments are made before money is spent on other things. Recovering from bankruptcy should give you the discipline needed to stick to it.

Step 1: Make A List Of Financial Goals

What do you want to accomplish both short and long-term? This list should be very specific for example:

  • Stockpile money in savings
  • Save for retirement
  • Save for a big event
  • Repair your credit
  • Save for education

Your list will be different depending on what is most important to you. Don’t worry about where the money will come from, and you won’t be able to contribute much toward them at first, but it’s important to know what you want to accomplish.

Step 2: What Is Your Income?

This should include your salary and any additional sources including child support or alimony, or money from side businesses or investments. If your job is seasonal or irregular, use the previous year or two as a baseline. You will need to estimate some sources of income—always use a low estimate.

Step 3: What Do You Need To Spend?

List all of your monthly expenses, per month, over the next year. These categories will include:

  • Mortgage or rent
  • Utilities
  • Phone
  • Internet, TV, and streaming services
  • Insurance
  • Groceries and eating out
  • Personal care
  • Clothing
  • Student loans
  • Household expenses
  • Transportation
  • Childcare
  • Entertainment
  • Gifts
  • Travel
  • Holidays
  • Charitable giving
  • Healthcare

Then add two important categories; savings and debt payments. Your categories will obviously differ, and the above are very general so customize them to your situation. Also, keep in mind that some of these expenses aren’t monthly.

Step 4: What You Spend Versus What You Earn

You may find you are spending more than you earn. This hopefully won’t be the case since your bankruptcy has discharged most, if not all, of your debts. Remember that the most important part of creating a budget is to adjust your spending so that all of your bills are paid, ensure that you’re making significant progress toward your financial goals.

Step 5: Adjust Your Spending

Your budget will show you what your greatest expenses are so you can work to reduce them. Variable expenses like utilities, TV and streaming services, clothing, entertainment, and household expenses are a good place to start, but it also helps to shop around for cheaper car insurance, cheaper cell phone service, and negotiate lower prices for other big expenses.

Step 6: Manage Your Budget

Once you see where your money is going, set up a way to track your monthly spending. This could be an app on your phone, personal accounting software like Quicken, an Excel spreadsheet, or even a system of labeled envelopes. Whatever makes it easy for you to see at a glance where you are with your budget at any given time.

Step 7: Make Things Easier

If making timely payments were something that got you in trouble before your bankruptcy, you can set up automatic payments for some of your largest expenses. Most companies have an automatic payment program, and some may even offer you lower payments or other perks just for signing up. Auto pay offers no more missed or late payments and an improved credit score.

Step 8: Revisit Your Budget Each Year

As your life changes, so should your budget. If you pay off a car, move into a new home, change jobs, get a raise, or experience other life-changing events, recalculate your monthly budget, so it accurately reflects your financial situation.