How to Make a Budget
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How to Make a Budget

How to Make a Budget

If you found the last entry helpful about what a budget is, this one should help you realize how to put one together.

Now I’ve covered this for myself in an earlier entry, but I’ll try to make this one more general so that people can use it as a form for their financial planning.

Remember that what you’re trying to find out in your budget is a clear understanding of where your money is going, where you want it to go, and how you can get those two goals to overlap.

The first step is to write your budget down! Don’t think that you can balance all of this in your head; otherwise, you will never make any progress.

I’ve never met anyone who can stay focused unless they have to go home and write down how much they spent and see whether or not they fell within the range of how much they were supposed to spend on a given category.

Once you have this written down, or an Excel spreadsheet open for it, go find your pay stub from last month. This is the first thing that you should fill in on your budget.

Make a Budget

Ideally, this stays the same each month or at least very close to the same figure. Set aside how much money you want to deposit in the bank. This is your first category after income since you have the goal of saving that much money.

You next want to go back and start to look at past bills to see how much things are going to cost you. For instance, I know that my cable bill every month is $52.65 and that my internet costs $28.99.

If you don’t have a bill that stays consistent, you can go look at your registry or your last account statement to see what you’ve paid the last few months. You can take an average of that to include in your budget. But be careful with these figures.

Remember that your heating bill is bound to be more in the winter than it was during the summer and your electricity bill will be higher in the hot months than during the cold.

Other categories you should include are student loans, mortgages, car payments, insurance, and everything else that you have to pay every month.

You should also try to give yourself some spending money. If you have a spouse, I recommend that you each have a separate account for spending so that arguments don’t develop over who spends more.

Also, pick reasonable figures for food and clothing costs every month. Now get going and keep track. Record what you spend each month compared to what you hoped to spend. Do this for a few months and see if any patterns develop.

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