How to Budget Your Income Properly
Budgeting the money coming into and going out of your household not only ensures you know your biggest expenses, but also prepares you to adjust the budget in the event of an unexpected expense and to know that all bills are paid for on-time and in-full. Budgeting is a necessary skill for money management everyone needs to know in order to be in complete control and responsible of their spending habits.
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Instructions
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Calculate all sources of income entering into your household from jobs and other sources. Add up the figures after taxes. Calculate other sources of income in your budget from odd jobs, interest, dividends, stocks, pensions or other allotments.
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Write out your monthly expenses in order from largest to smallest. The largest expense is often your rent or mortgage payment followed by a car or other loan payment. Don't forget to write both fixed and flexible expenses. Other fixed examples may be your car, life and home insurance and lot rent. Flexible expenses are not always optional, but vary in cost from month to month including your electric, gas, food and clothing costs.
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Highlight, underline or make a mark next to the expenses that are most important and cannot be modified in any way, shape or form such as your mortgage payment, which can't be adjusted unless you refinance. You can adjust some things such as your daily coffee shop run if necessary and and they don't need a mark indicating excessive importance.
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Combine your income and expenses to see how much you have left over. If you have extra income, you're doing well and should consider saving some more or paying down debts such as student loans or credit cards. If you don't have enough to cover your basic expenses, you need to cut corners where possible to make your income fit your needs.
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Take steps to reduce your expenses such as cooking at home instead of eating out, keeping your heating and cooling bills lower by dressing appropriately and not turning up the heat or air conditioning, canceling your cable television and borrowing books from the library. You can also get a re-assessment on your home to reduce your taxes or refinance your mortgage for a lower monthly payment with a better interest rate.
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