How to Budget Your Income

Budgeting your income will help you stay on track and plan for both saving and spending. By using a budget to plan expenses, you will feel empowered by spending only part of what you have and saving the rest for future use.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Paper and pencil
• Calculator
• Pay stub or receipt

1. Determine your monthly take home pay. If you're paid more than once a month, add up your paychecks to figure out the total.
2. Subtract all of your expenses from a previous month from your total monthy income. Refer to bills paid, receipts accumulated, and cash withdrawn from your bank accounts to determine your expenses.
   
3. Use the figure to determine where you stand financially. A positive number means you have a surplus, or money left over each month. A negative number means you have a shortage, or that you are spending more than you are bringing in.
4. Write down categories for your spending. These might include, but are not limited to, automobile expenses, home expenses, food, clothing, medical and entertainment.
5. Determine areas in which you could cut back spending. Create a new, reasonable spending amount for each category. Even if you find you do not have a financial shortage, you still may be able to increase your savings.
6. Use your new budget plan as a guide for future spending.

Tips & Warnings

• Only spend when you need something. Unnecessary spending leads to larger bills and less savings.
• Every time you find yourself paying for something or making a puchase, assess how it could be reduced or eliminated.
• Set a savings goal each month for motivation.