It’s important for you to find a budget that’s simple and easy to use. With proper planning and the right budget, you’ll soon be on your way to financial success.
Creating a budget doesn’t have to be painful if you follow these steps:
Make a list of the information I want to include in my budget.
A budget can be a piece of paper with headings for income and expenses written on it or it can be a detailed worksheet that you download from your computer. Decide what level of detail will work best for you.
Look at several sample budgets online.
There are hundreds of Web sites that offer sample budgets: you could spend hours looking through them all. Since there's not a big difference among the various budgets, examine two or three and pick one that fits your lifestyle the best.
Once you decide which budget you will use, write down all of your monthly income and expenses. Examples of income include wages, allowance, and birthday money; examples of expenses include gas and auto insurance, clothes, cell phone bills, donations, and entertainment.
Tip: Most personal budgets are calculated monthly, so remember to calculate your income and expenses accordingly. For example, if you pay your car insurance yearly, be sure to take the total cost of the insurance and divide it by twelve to calculate your monthly expense.
Plug in my numbers using the sample budget.
Use the example that you printed to guide you, and simply list your income and expenses in the proper columns. Subtract your expense total from your income total. If your expenses are more than your income, figure out where to cut back. Put extra income into a savings account.
Review my budget every two to three months.
Take a look at your numbers and make adjustments as needed. If your expenses increase every month, decide if you need to reduce your spending in one or two areas or cut back on your savings.
Tip: Keep in mind that your income and expenses may not be exactly the same each month. Some months your income may be greater (extra babysitting jobs, more allowance for extra chores), and other months your expenses may be more (prom dress, concert ticket). But by creating a general budget, you will have a pretty good idea of how much you should be saving each month.
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