How to Make a Real Life Budget

Money

It is easy to make budgets based on percentages from a book or worksheet. But how do you make a budget that fits the real life that you live?

Instructions

1. Create a list of categories. This list can be from a finance book, a downloaded budget worksheet, or from your own memory.

2. Make a list of all your regularly scheduled payments. These are checks you write every week or month. Car payment, rent, childcare, and insurance payments are examples of this.

3. Get a notebook.

4. Track every expense, cash, credit or debit card, check or gift card in the notebook. Write everything down, including small things like the $1 latte and 50 cent parking fee. This will give you your variable expenses. Do this for a whole month.

5. Total up where you actually spent your money in the variable expenses.

6. Total up variable and regular expenses. This is your baseline budget.

7. Cut the fat, if you choose. Or see how much you have leftover that can be used to save or pay down debt.

Tips & Warnings

• If you have irregular "regular" expenses like car insurance paid every six months, divide that amount into a monthly figure and add that monthly equivalent into your budget. Then write the big check every six months or year for that expense, leaving the rest of the value alone in your checking account the rest of the year.