How to Create a Personal Budget

Video Transcript

"Hi, this is Doug Benson on behalf of Expert Village. I'm going to show you how to balance your checkbook and as a result become a better manager of household finances. Tracking your spending is the first step to establishing a budget. Start with the known items the fixed costs up to this point you have been looking at the transaction history. You probably started to see some trends; the best way to look for is to examine path backwards and see what has worked or not work for you in the past. You can use your previous spending habits to help you establish a budget. If you're head of the household this isn't going to be too difficult, if you live in a situation where more than one adult is going to be effected you'll need to establish a budget that works well for everyone. Communication is the key and compromise may need to be used. A good rule of thumb for setting up the budget is to start with some priorities, housing, food, clothing and transportation should be taken care of first. Then as money allows set aside money for savings, entertainment, eating out and future purchases. Another good thing to remember is after you set up your budget you're going to find out that it didn't work the first month. Be ready to change it for the second month, the third or even the fourth month. As time goes on you'll find that you need to make fewer and fewer changes. Try to stay flexible, be ready to make adjustments along the way but remember to involve everyone who helps you set up the budget in the first place, their input are still valuable and they should be included in the process. Having a clear financial plan that everyone agrees to will help you minimize conflict and allow you to plan for the future. Watch my next segment as we continue to learn more about balancing your checkbook and becoming a better manager of household finances."