Budgeting
Creating Your Budget
The first step to creating a good budget is figuring out your monthly income and expenses.
Your Income...
Your income is the money that you earn. When budgeting, it is important to use your Net Income – this is the money remaining in your paycheck after your employer takes out taxes, medical insurance and your retirement contribution. If you regularly receive money in addition to your paycheck, include this figure as well.
Your Expenses...
Your expenses are the money that you have to pay out each month. Expenses include things like rent, utility bills, car insurance, credit card bills and loan payments. Don't forget about expenses that may only occur annually or semi-monthly (ex: doctor appointments, oil changes) and expenses that you do not receive a bill for, such as groceries, gas or transportation, and other daily necessities.
Tracking Your Expenses
It’s impossible to create a budget or stick to it without knowing what you are spending your money on or even how much you are spending.
There are a few ways to track your expenses efficiently. You may choose to use your checkbook register, make a spreadsheet or use a notebook.
Our Budget Worksheet can help you get your expenses organized. Download it as a an Excel Spreadsheet* or as a PDF.
*The Excel spreadsheet version includes three sheets: an example of a completed budget, a budget worksheet to calculate totals for you and a blank worksheet to print.
Tip: While it’s easy to record the bills that you pay, money that you spend throughout the day might be forgotten about by the time you get home. Try keeping all of your receipts – at the end of the day you’ll be able to record your expenses accurately.
Following Your Budget
Following your budget might be the hardest thing to do. Following a budget takes discipline, self-control and will power.
“Does this fit in my budget?” should be the first question to ask yourself before buying anything. If the answer is yes, go ahead and buy it; if the answer is no, reconsider your purchase. If you find yourself saying "Yes" to EVERYTHING that you want... it might be time to reconsider the amount of savings that you are putting aside.
Make sure to look at your budget on a monthly basis at the very least. It may be wise to look at it each time you get paid or as you are paying your bills. The more you look at it the more likely you will be to follow it.
Download our Budget Worksheet
We've created a worksheet to help you develop a personal budget.
This worksheet is available as an Excel spreadsheet* or as a PDF.
*The Excel spreadsheet version includes three sheets: an example of a completed budget, a budget worksheet to calculate totals for you and a blank worksheet to print.
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Something to Think About
Budgeting can seem inconvenient because it takes time – time to plan your budget, track your expenses and evaluate your success.
However, successful budgeting will save you a lot of time and money (and headaches) in the long run.
Not only will you benefit from a regular savings plan, but you'll also have your finances in order – avoiding fees and paying less interest.
Following a budget and staying on top of your expenses is so much easier than making the long climb out of debt!
