You already have most of the information you need. To create your budget, follow the simple steps outlined below to get a clear picture of your monthly finances.
1. Add Your Income
To set a monthly budget, you need to determine your income. This Budget Worksheet will take you to a simple worksheet. Be sure to include all of your income – salary and interest, and any other income. Be sure to use your take-home pay, not your gross pay. There is an additional “other income” line item if needed.
2. Estimate Expenses
Keep track of your expenses for one month. The worksheet categorizes spending as either fixed or flexible expenses. Fixed expenses do not change from month to month – items like an auto payment or insurance. Flexible expenses change from month to month; this could be food or gasoline. If you notice significant spikes in expenses from month to month, it may be best to average that dollar amount over 3 months.
3. Figure Out The Difference
Once all of your income is tallied and your expenses totaled, subtract the expense total from the income total to get the difference. If you have a positive number, you’re spending less than you earn—that’s terrific! If the number is negative, then your expenses are greater than your income. That means one of two things, either cut back on expenses; or increase your income.
Once you’ve created your budget, the next step to keep track of actual spending. Stick to your budget as best as you can. Make adjustments as needed. Half the battle is knowing where your money goes.