How to Budget Monthly Money for Bills

Create a monthly budget.

Without a budget, it's easy for spending to get out of control. A budget creates a blueprint for how you spend your money each month. The process of creating this document also allows consumers to reflect on spending. A consumer might not realize she's spending double the amount she pays on utilities on eating out monthly. A budget will help you identify these areas and improve your overall spending habits.

Instructions

1. Tally up your monthly income. Monthly income determines how much you can afford to budget for expenses. If your income is variable (such as commissioned sales), average together the past 12 months of income to estimate your monthly income. Otherwise, use the net income amount from your pay stub.

2. Create a list of monthly expenses. List expenses including housing, transportation costs, utilities, food, debt payments and entertainment. Make sure you include everything. Subtract this number from your income to determine whether you have funds left over. If you do, consider boosting contributions to your retirement savings account or paying more toward outstanding debts. If you face a deficit between expenses and income, it's time to cut costs.

3. Look for ways to trim expenses. If you commute to work, transportation costs can be a large expense. Join a carpool or consider using public transportation a few times a week. If food is a large culprit, consider scaling back on eating out. Packing a lunch instead of eating out can reduce costs.

4. Evaluate your success. Creating a budget isn't a perfect formula. Each month, evaluate each spending category. Determine how much you spent versus how much was budgeted. If you overspend in entertainment and under spend in utilities, you may be able to reallocate funds.

Tips & Warnings

• Don't forget to set-up a savings account. If you don't have much money left over each month, setting up a savings account can seem unrealistic. However, setting aside as little as $20 each month adds up over time. An emergency savings account allows you to pay cash for unexpected expenses instead of racking up credit card debt.

• If debt payments make up a large portion of your spending, shop around for lower interest rates. Online tools such as Bank Rate allow consumers to compare interest rates across the United States. Securing a lower interest rate on debt obligations will help you pay off debt quicker and free up extra cash.

References

• MSN Money: How to Build your First Budget
• Bank Rate: Find Lower Interest Rates