All aboard the budgeting train!A budget can be created at any time of the year, but it is a bit easier at the start of the year.
No need to be frazzled or hesitant about making a household budget.Budgeting can be done in a few simple steps.
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No need to be frazzled or hesitant about making a household budget. Budgeting can be done in a few simple steps. #budgeting #expenses #income #MakeABudget #budget Click To Tweet
Spending Habits
The first thing to budget successfully is to stop spending more than you make.That is the engine of the budget train. It is such a simple statement but a necessary one.Changing spending habits can be hard.There is some kind of weird stigma with being thrifty.You have to get over that!Everyone in your household has to be on board the budget train.Why spend more money than you have to?All the money you save can be like a new source of income.
I have a budget printable in my Etsy.com store.You can purchase it, make one like it, or use a simple paper plan.
Your Income
The coal car of your train is your income.
Gather up all income sources.They could be from a job,bonus checks, child support or alimony, government checks, retirement, investments, or personal business income.Use my monthly budget sheet, plain paper or spreadsheet software to list all income by month and total them,It is easier to create a budget based on a month.If you are paid weekly or biweekly, adjust your income to a month.
Your Expenses
The passenger car of your train is the list of your expenses.This is a very important car!You need to have a list of everything you spend. I have a free PDF downloadto help you record what you spend.
You may be surprised to see where some of your money is going.I know we were.Once you record everything, you may see that you spend $5 or more a week on junk like a soda and chips or that you stop at the ATM way too often for “spending cash”. Multiply that to a yearly total and it could be a lot of money.
Well, enough on tracking everything you spend. Just do it!
Then you need to record other spending. Start with monthly recurring expenses.These are the regular passengers on your train car😀
Here are some usual monthlyrecurring expenses. Along with your spending record, they will help you know that you remembered everything.
Food, childcare, home insurance, health insurance, automobile insurance, gas/electric, phone, cell phone, cable/satellite, internet access, monthly prescriptions, water/sewer, garbage service, mortgage or rent, car payments, dining out, school lunches, work lunches (brown bag or restaurant), entertainment and charitable giving. Remember to also include your monthly savings account goal (payment to yourself). Don’t omit items such as movies or dining out if you know you will continue these activities. Just be sure to stay within what you can afford to spend.
Now, for the occasional riders on the passenger car.This is a list of expenses that are not on an every month basis. Some examples are: Christmas, other holidays such as Mother’s Day, Father’s day, etc, birthday’s, pet care, personal care (beauty shop, etc), property tax, income tax, household repairs, doctor visits and prescriptions, clothing and shoes, school supplies, school tuition or other school expenses.Also, include expenses for debt such as school loans credit cards.
Be sure all income and expenses are on a monthly basis.
Get a free list here of over 110 budget categories that you can use to remember all your expenses.
Use your list of income and expenses to create a budget.
Budget Plan
Hook your cars together with a budget plan. For each month, record your income and expenses. If you have any money left after planning for all expenses, put the extra money into an emergency fund savings.
If you have more expenses than income, you must adjust your spending or generate more income.This is where some pain and negotiating come into play.If you can generate more income, that is great – if not, you have to adjust spending.
It is difficult to easily reallocate spending.
Somewhere the numbers have to drop. Reducing a category means somewhere someone is going to do without something. You have to plan to spend less than you make!
When creating your budget and an expense is annual, such as Christmas spending, come up with an amount you are going to spend.Divide it by 12 and get your monthly allocation.Put that money where you won’t spend it. You can open another checking account to hold the allocated money until you need it.
Have a column on your budget worksheet to record the expected expense for the month.Then at the end of the month, enter how much was actually spent.Record the difference between the two.Showing the difference will help you determine if your monthly budget amounts are in line.
For information – here’s a list of “recommended budget guidelines” for percentages of your gross monthly income:
- Housing 35%. This includes mortgage or rent, taxes, repairs, improvements, insurance, and utilities.
- Automobile or public transportation 20%. Vehicle loan payment, gas, oil, repairs, insurance, and parking.
- Debt 15%. Credit card payments and personal loans.
- All other expenses 20%. This includes food, insurance, medical, clothing, personal items, and childcare.
- Savings 10%. Stocks, retirement accounts, real estate, and savings accounts.
Use something like my Monthly Budget tracker above, plain paper or electronic ones like Mint.com, PersonalCapital.com or.SavvyMoney.com.
Whatever you use, just do it. Knowing where your money goes is the only way you will get ahead financially.
