A monthly budget is an essential staple for your household if you are trying to save money.
It’s never fun getting to the end of the month and having no idea where all your hard-earned money went.
Thinking about your finances can be stressful, but coming up with a solid budget and sticking to it can eliminate some of the stress and anxiety surrounding money.
To make your budget, you can start as simple as writing it out by hand with pen and paper or by using a Microsoft Word document or Microsoft Excel spreadsheet.
The first step to creating your budget is gathering all your monthly expenses.
This includes everything you spend each month, such as your mortgage or rent, all your utilities, credit card bills, Internet, subscriptions, car payment, car insurance, etc.
You must also be mindful of other expenses you have that you may pay less frequently than every month, such as your car registration, so that you can factor those expenses into your budget for that given month.
Many expenses also vary each month, such as gas, groceries, and entertainment.
By looking back through your checking account statements, you can come up with an average for all of these variable expenses to better fit them into your budget.
Once you have figured out all your expenses, you then need to determine your monthly income.
This should be far easier than tracking down all your expenses, especially if you have a job where you are paid the same amount every two weeks.
This step might be more difficult for people who are self-employed and have varying amounts of income each month, or people who work jobs where they do not make the same amount of money each week, such as a server or salesman working on commission.
Make sure you don’t forget any irregular income, like bonuses or income from a seasonal or part-time job.
Once you have your expenses and income totaled up, you need to subtract your total monthly expenses from your total monthly income.
The amount leftover is your discretionary income, which you can then allocate to savings, retirement, and any major expenses you know you have coming up, such as a vacation or big purchase.
If you find that your monthly expenses are greater than your monthly income, you will need to make some tough decisions and cut down on your expenses where you can as much as possible to get yourself back on track.
Once your budget is all set up for the month, you will then need to track and stay on top of your expenses and purchases to be sure that you’re sticking to your budget and not spending money outside the budget.
Most banks now have online banking apps where you can view all of your transactions with ease.
There are also apps made specifically to help you track your budget and expenses, such as EveryDollar.
Making a budget is a lot of work upfront, but it is well worth it to help get your spending habits in check and be in control of your finances.