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Creating a Budget
Creating a budget. Learn the 6 essential tips that simplify the creation of your budget. This is the #1 thing to do when you want to begin saving money. Creating a Budget Tip 1: List Your Expenses First you need to gather your past monthly bills and statements. The best way to make sure you don't miss anything is to go through your check register for the past 2-3 months. It's also a good idea to go through your most recent credit card statements. You need to get a good feel of what your monthly expenses are. Write everything down. Even if it's just a soda pop and candy bar at the convenient store. You need to know exactly where your money is going. Just to make sure you remember everything, here's a list to help:
Creating a Budget Tip 2: List sources of Income This next step is very straight forward. It's usually a very short list. If you're a one income family then it's really short. If you're a two income family, then you're lucky enough to have two on the list.
Creating a Budget Tip 3: Separate SET Expenses from VARIABLE Which expenses are the same every month? Which ones change? Go through your list and put the amount of money that is spent on each item monthly. For the variable expenses, put an amount that reflects the average or higher amounts paid. Your heating bill for example: In the summer it's low-minimum, but in the winter it's considerably higher. (Or it could be reversed if you live in an area that needs AC year round.) You can reflect the higher amount year round, and put the extra money in savings; or you can make two separate budgets for summmer and winter months. You may also have expenses that seem to surprise you every year. Like registering your car, buying new tires, or buying a wedding gift. Here is how to be prepared for this:
But remember that this isn't a "savings" program. Keep it for those expenses that you've set it aside for. Do this, and you won't be scrambling to come up with money to change the oil in the car, it will just be there!
Creating a Budget Tip 4: Plug in the Numbers Now total all your income. Then your expenses. (Use a calculator if you need.) Now that you have your totals for both income and expenses you need to find the "difference". Begin with your income amount and subject your expenses. What are your numbers? Hopefully your income outweighs your expenses. If not, then it's time to adjust. What if you have a little extra money? Plan to put that much more into your savings account each month. Before you know it, you could have that special item you've been hoping to buy. Creating a Budget Tip 5: Make Adjustments This can be the hard part if you've realized that you need to cut back. But don't worry, where there is a will, there is a way. Be honest with yourself. If you are over by 100 dollars and your spending 50 on cable and 60 on dining out, then cut it out. No one ever died from not watching TV or eating at home! It may be hard to adjust at first, but it's better than going in the "hole" each month. Be realistic and live within your means. If you are unwilling to cut items out, then find a way to make that extra money.
If you want it bad enough, you'll find a way. Creating a Budget Tip 6: Stick to it and Review often You cannot simply make a budget and never look at it again! What's the point if your not going to use it? Keep it on hand and plug the numbers in each month. You may even want to plug your numbers in each week. This will help you stay on track and not overspend. If your budget doesn't seem to work for you, then go back to tip #5 and make more adjustments. Eventually you will find what works for you and what doesn't. Return to Money Saving Tips
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