How to Make a Personal Budget Worksheet

The first step to winning with money is to make a personal budget. By recording and following a written money plan, you will be able to pay off debt, save for large expenses and plan for the future financially. You'll also have the peace of mind of knowing where your money is going each month, not wondering what happened to it all at the end of the month.

Living withing a budget is a new experience for many, and while it may feel constricting at first, it is actually quite freeing to know exactly what you're supposed to do with your paycheck each month based on your self-created spending plan.

Here's how to make a personal budget.

Difficulty: Moderate

Instructions

1. 
    

   List each income source and the amount for the month for which you are budgeting. If your income stays the same, when you make your first personal budget you'll have the basic template for each month.
   
   Only list income for the current month. Quarterly bonuses and the like, if applicable, will be listed the month they are received. Note the total income for the month and highlight or bold this number.

2. Make general categories for the personal budget, and subcategories to further enumerate your expenses. Review credit card statements, utility bills, and bank account activity to get an idea of what is spent in each category.
   
   General categories might include: Housing, Utilities, Charity, Insurance, Savings, Food, Transportation, Clothing, Personal, Medical, Recreation, Debts.
   
   Subcategories might include, for example, water, gas, electric, and cable under Utilities and fuel, car repairs, tolls, and bus fare under Transportation.

3. 
    

   Fill in each subcategory with how much you plan to or expect to spend in that category for the month. Consider your schedule: if you are working more or less or traveling, your needs will change.
   
   Add up the totals for each category and then the total of all categories of expenses. This number is your total budgeted expenses for the month.

4. Compare your Total Expenses number to your Total Income for the month as you make a personal budget. The two numbers need to be equal -- this is called zero-based budgeting and accounts for every dollar you earn.
   
   If your expenses are greater than your income, it's time for budget cuts. Evaluate each category and cut the non essentials as need to make your numbers match. When your expenses are less than income, you need to allot the rest of the income to specific categories. Start with an emergency fund and debt payoff if you are not debt-free, or savings and investing if you are.

5. 
    

   Review your personal budget and make sure it incorporates your goals -- debt freedom, short-term savings, long-term savings, investments for the future, a home purchase, and the like.

6. Using your paper budget, make a personal budget worksheet in your word processor or spreadsheet program. Save a master copy and create a monthly version each month, making changes to income and expenses as need to tailor to the specific month.

Tips & Warnings

• Accurate estimates to make a personal budget may be difficult if you've never budgeted money before. Be sure to record what you spend in each category and tweak your budget as needed for the first few months.
• Don't slip into bad habits by using your debit card at will. Instead, pull out the necessary cash weekly and don't spend after it's gone.

Resources

• How to Make a Budget
• Personal Finances 101

[smartguy386]

on 12/19/2009 Nice tips! 5*