How to Build a Budget
There are many products that can help you create your budget. You can use, paper and pen, downloadable apps for your phone, or even, Microsoft Office Excel, which has some pre-built-in templates for you to use to create a budget. Do your research and find the best option for you.
So, how do I create a budget?
First, list each source of income you have tracked. Make sure to add up your total income. Next, based on tracking your expenses, list out your monthly expenses. Be specific and thorough. Remember to include things like your groceries and miscellaneous expenses, car or health insurance, and entertainment expenses. Begin entering your expenses by each item in the actual column. Add up your total expenses. Review your income versus your actual expenses, some call this your cash flow.
Do your expenses exceed your income? Or do you have money left over?
Having money left over is a good thing! It is important to have a goal when saving money, this will help when you have an unexpected expense (e.g., your car breaks down, or you have to go to the doctor), to make sure you have the money to cover it! Or maybe you can afford to go on a vacation! Next, let’s actually set your budget, deciding what you are going to spend for the month.
Next to each expense, enter the amount that is your goal for that category. Some of your expenses are more stable, like rent and maybe internet, or insurance. Other expenses you have more control of, like food, or miscellaneous expenses. Make sure your projected expenses are reasonable and attainable, even if you have to sacrifice a little. Your goal for the month is to not spend more than what you budgeted.
Once you have entered in your projected goals for each expense, erase or delete the contents of the actual column. At the end of the month, you will go back through, and enter and evaluate your actual expenses for each category. You can see where you met your budget goals, and where you overspent. This will help you in creating a budget for the next month.
Each month you will go through this same practice. So, it’s a good practice to set aside time each month to work on your monthly budget.
