Many people would like to be able to create a budget. But it can seem like one of the most difficult things on the planet to accomplish. By understanding how to create a budget, you’ll be more in control of your finances. Use these 3 steps below to make your own monthly budget planner.
1. Create a list of your monthly income.
Be sure to include all sources of regular income, including part-time jobs. Add up your numbers and write them down.
2. Determine monthly expenses.
Make sure to include food, gas, clothing, utilities, and housing costs. If you’re not sure how much these are, just save your bills and receipts for the next month and you’ll have a more accurate idea.
3. Figure out if your monthly income is enough for all of your outgoing expenses.
Are you making enough meet all of your monthly obligations? If not, then consider reducing expenses in certain areas. One of the biggest areas where people can save money is in entertainment and eating out.
Also, ask yourself if you’re really using all of those services that are part of your monthly bills. Do you really watch all of those T.V. channels? How many unread magazine subscriptions do you have around the house? You may be surprised to find out how much extra found money you can come up with.
After you figure out you income and expenses, then it will be easier to create a budget.
Start estimating how much your bills cost during the next month. If you’re not sure, save your bills and receipts for one month to get some solid numbers of how much your spending. Making a budget in an ongoing learning experience will take some time to perfect. Just stay with it for about 3 months and you’ll be in charge of your money. Isn’t that the way it should be?
One of the most basic and most important ways to build net worth, is to save more money each month. Increasing savings requires a budget.
A budget allows you to see where you are overspending and to take corrective action. The most important part of a budget is constant review and discipline!
Now it’s your turn to determine your budget. Having a written budget is very important as it prevents you from “cheating”. You can create a plain budget on a piece of paper, or you can create a spreadsheet to do all the calculation for you. In the resources below, a free budget spreadsheet is provided.
The basic budget should include a “Planned Budget” and “Actual Budget” (where you document what actually happened). As you consistently review your budget each month, you will discover ways to save even more money.
Here are some basic instructions for filling out a Budget Worksheet:
Fill out the first column on the spreadsheet labeled “Planned Budget”. This is your GOAL to achieve each month. This column will represent the amount of money you hope to spend in each of the given categories.
Fill out the “Actual Budget” as the month progresses. This will help you see where you are overspending.
Compare the Planned Budget to the Actual Budget at the end of each month. As you focus on saving money, you will surprised at the many different areas in which you can cut back your spending!
Also, note on the Budget Spreadsheet that some of your expenses are “Necessary” and others are “Discretionary”. Try to eliminate as many discretionary expenses FIRST, and then look to other categories to save even more.
You should continually assess where your budget is each month and you will notice your net worth increasing.
For a free budget calculator and a continuation of this article, see the resources below.