How to make a budget

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By dasbootjoe
User-Submitted Article

Article Rating: (9 Ratings)

Budget your money

Have the power of knowing where your money is going.

Difficulty: Moderate

Instructions

Things You'll Need:

Money
Time
Excel
Computer
Will Power
Motivation

Step 1

If you are like most people, making a budget is something you hate doing. It is a necessity though and should not be thought of as a bad thing.
Step 2

The first thing you need to do when making a budget is figure out what you're spending and how much you're spending. Keep a record of every transaction you make and enter them into an excel spreadsheet. For example, in column A you can list all of your expenses and in column B what they cost you. Do this for one full month and compare it to your income for the month.
Step 3

If you spend more than you earn, adjust your spending. Look at each category and see if you're spending too much. If you notice that you are spending too much on take-out than cut back. Once you have an idea about how you are spending money you are ready to make a budget!
Step 4

Now you need to categorize your expenses. You should have the following categories: Must Haves--> Needs---> Wants.
Step 5

Your Must Have items are Rent, Insurance (Car and Health), Food, Medicine, Clothes, utilities, phone and bathroom items. These are the things you can't live without. These are your most important items. This should cover 60% of your income.
Step 6

Your Needs are car payment, internet service and cable. These things you need but can live without. This should cover 30% of your income.
Step 7

Your wants are a new watch, cellphone, burger king every night, taco bell, surround sound for your TV, ect. These things you want but don't need. Do you see the pattern? These should cover the final 10% or so of your income.
Step 8

The final 10% of your income, your wants, is your savings. When you make a budget, setup long and short term goals and save for these wanted items, like a new watch. Put the money into a high interest savings account and forget about it until you have enough to buy the watch.
Step 9

You can keep track of this with a well thought out excel spreadsheet. If you follow these steps, over time making a budget and sticking too it will be second nature.