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How to Create a Budget


Just because you make a spending budget, doesn't mean you have to spend it all. See more pictures related to debt.
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Let's face it -- the dollar just doesn't go as far as it used to. The price of gas and food is up, and so is the unemployment rate. The only thing that seems to be going down is your disposable income. Fear not, because there are ways to make your money stretch. But you need to have an overview of your household finances first. So, grab your bank statements, credit card receipts and paystubs, and let's prepare a budget for your household.

Get Your Numbers Together

Start by writing down your monthly take-home income. This is the number that dictates what you can spend to keep from racking up the credit cards or busting into your savings. Next, you'll want to record your fixed expenses. These are items that you pay every month that usually cost about the same, like your mortgage, your car payment and your cable bill. Then come the variable expenses, things like gas, groceries and meals out. These are a little harder to pinpoint exactly because they often vary per month.

If you keep good records and can access a year's worth of past receipts in each category, add them up and divide by 12. This will give you a good estimate of what you're spending on the average each month. If you don't have these records, you can just look at last month's tally and estimate based on that. Remember, no cheating. It behooves you to be honest with your numbers, and you may even want to set yourself up for success and estimate a little high. Spend time thinking about any and all expenses that come up in your life. Vet bills, lawn care, household supplies -- they all come out of your bottom line, and surprises will throw off your budget in a hurry.

Do the Math

Now comes the moment of reckoning. Add your fixed and variable expenses together, and subtract them from your income. If you have a positive number, you're in the black, and congratulations are in order because you live within your means. But if you're in the red, you have a little trimming to do. Your hard costs are pretty much what they are, so it's the variable costs that need a little work.

Eating out too much? Pack your lunch and have friends over for dinner, potluck style. Spending a lot on gas? Consider carpooling or better yet, take advantage of public transportation options in your city or town. Is your clothing budget out of control? Learn to love picking through the brand labels at discount stores, or take a sewing class and make your own frocks. Nobody said it's going to be easy to trim costs, but you can at least try to make it fun figuring out clever ways to beat your budget. If, no matter how hard you try, you just can't get the numbers to add up, consider finding an additional source of income to support your habits. Have a garage sale, sell some stuff on eBay or use your mad fashion sense to help the fashion-challenged shop for clothes. Soon, you may even have a few bucks in your savings account.

 


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