How to: Budget
Some people are spending more money than what they earn because they do not fully understand how to budget. A budget is a plan of action that can help you live within your means, pay off bills or save for the future. Not budgeting can lead to high credit card statements, problems paying bills, annoying calls from collectors and sometimes even bankruptcy. By setting up a budget and following it you will see positive results in a relatively short amount of time.
- Difficulty:
- Moderate
Instructions
-
-
1
Record everything you spend for one month. Keep receipts or document in a small notebook how much you spend. Include groceries, gas, coffee, and dining--everything.
-
2
Write down the amount of income you receive each month. If your income varies because you work on commission or for some other reason, take an average for the last 12 months.
-
3
Figure all of your necessary expenses and write them down. You can create a chart by hand or use online resources. Add your car payments, mortgage, insurance, taxes, utilities, etc. For utilities, take the average for the last 12 months.
-
4
Subtract all of your expenses from your total income for one month. If your income is higher, then you are doing good. You can apply extra money to credit card payments, mortgage, or other financial goals. If your income is less, then you need to adjust your spending habits so that you are not "negative" at the end of the month.
-
5
Calculate how much you need each month for the necessities. Food, rent, mortgage, car payments, and other monthly bills come first. Then decide how much extra you can put toward fun money and entertaining.
-
6
Change your spending habits. Evaluate and adjust how much you eat out. Bring lunch or coffee from home. Cancel some of your cable channels or even your land line if you have a cellphone. Save energy bills by turning off electricity when you don't need it or unplugging appliances. Make ice instead of purchasing it. Buy store-brand items instead of the popular ones.
-
7
Create more money. Get a second job, babysit, donate plasma, sell items on eBay, or even have a garage sale. There are plenty of ways to bring in extra money which you can apply toward your bills or put away for an emergency.
-
8
Follow your budget and make changes when you need to. Allow extra money around the holidays or birthdays. Keep track of everything your are spending so that you don't go back to your old spending habits.
-
1
Related Searches
References
- Photo Credit Jupiterimages/BananaStock/Getty Images
Comments
-
greatnews
Mar 09, 2009
We tried doing this a number of times but it always seemed like our output was more than our input, and yet we seemed to make it every month.... It was very weird. I know, I probably did something wrong. :) -
kurious2no
Feb 25, 2009
Great angle on picturing costs. I do this often. 5*
-
Lilfix
Jan 19, 2009
Great article on how to budget...You have a lot of helpful info here... RRRC 5*
-
hoolihan0519
Jan 19, 2009
Excellent article. This is a very good way to see exactly how much you are spending and on what. People will be surprised about the money they spend as a few dollars here and a few dollars there will mean big money at the end of the month. RCR.
-
MrsAlwyn
Apr 14, 2008
Great tips! It's amazing where all the money goes when you have it written down. Saving money for 'just in case' and for retirement is a must for everyone. Too bad saving anything, let alone 40% of a small income is unrealistic.
