How To Set Up A Budget Plan
Setting up a budget is really frightening to some people but once you get the hang of it, you simply won't know why you didn't do this sooner!
The most important aspect to consider in having a budget is knowing how much you're bringing in and how much you're spending across the board.
Sometimes the areas are easier to discern such as mortgage or rent. Those costs are fixed, right? so that's a no-brainer.
But then when you have utilities that might fluctuate from month to month, or phone bills that can go up or down....or entertainment expenses that you just don't know where the money gets away from you on.....or those new shoes you just HAD to have and you didn't plan on buying.....
All these little things that crop up in a month or in several months are the budget breakers.
Every time you reach for your credit card knowing full well that you are getting deeper and deeper into debt that you know you can't possibly pay off in a month's time let alone a year's time is the reason budgets were invented.....to stop this kind of spending behavior and get you back to solvent which where you WANT to be.
I think all of us at some point in our lives have been there and done that. I had my experience as a young woman starting out and ever since, I've hated even thinking about not living on a budget.
All this said, let's look at a simple budget and see what you need to categorize.
No matter if you use a pencil and paper, a high-tech budgeting program (there are gazillions that are totally free), or if you set up the envelope system recommended by Dave Ramsey....even if you get out an abacus and a calculator and start adding things up and posting sticky notes....set up a budget and then make it work for you.
Know how to make it work by tweaking it to your specific spending styles and your personality. Not everything will work for everyone but you can make your budget work for you!
Next, start putting together your expense categories.
You'll notice that you have many more expense categories (probably) than income categories!
Federal income tax
State and local taxes
TAX SUBTOTAL _________
Mortgage or rent
Water and sewer
Renter's or homeowner's insurance
Natural gas or oil
Land line telephone
Homeowner's association dues
TOTAL HOME ________
TOTAL FOOD ________
Gas and oil
Copays for insurance
Chiropractic care not covered
Bus, subway or taxis
TOTAL FAMILY _______
TOTAL HEALTH _______
TOTAL TRANSPO _______
Home equity loan
Vet costs acute
TOTAL DEBT _______
TOTAL RECREATION _______
TOTAL PETS _____
401(k) or IRA
Shoes & accessories
TOTAL CLOTHING _______
TOTAL SAVINGS _______
TOTAL MISC _______
The differences between your income sheet and your expense sheets is your spendable income.
You can also make columns for your monthly budgeted (anticipated amount) and your actual monthly amount spent for a period of time to see how on target your budget is.
Compare the difference to see how it truly shakes out in terms of numbers.
HOW TO MAKE A BUDGET WORK
Add up all your monthly expenses and investments and then deduct from your income and you will have your useable monthly income.
It's important to note what is coming in and what is going out.
The best way to track this is to keep a little notebook and jot down for a month or so every single thing you purchase and how.
You'll find out more about your spending habits and by doing that, you might see patterns you need to keep or patterns you need to change.
Then begin budgeting in projected amounts for the month and what the expenses are actually costing you.
You'll get a feel for the differences pretty quickly and then make adjustments appropriately.
One factor to consider is that if your job is like mine, which is totally based on piecemeal work and fluctuates from week to week, it's really hard to anticipate what your income will be. In a case like mine, you need to always go with a lower figure for what you might make in terms of dollars....and then readjust when you see your final paycheck.
Dividing expense categories into envelopes is a super way to discipline yourself to only spend a certain amount on certain things. When it's gone, then you have to wait until the next time there's money in the envelope!
It's also a super way to teach kids about budgeting concepts.
BUDGET PLANNING AND SETTING UP A BUDGET
There are many free worksheets and programs out there you can download on line to help you get into budget planning and help you set up your budget.
Whatever way you use to set up your budget though....just do it. You will not be sorry you did.
Living within your means does mean learning how much money you have versus how much money you're spending and making sure that you are not spending more than you make.
That’s where credit debt originates and to be in credit debt all your life is like living with a huge weight hanging around your neck.
You can do it! We all can do it! But the first step is knowing where your money is coming in and where it's going out.
Knowing these two simple facts will start you on the path to financial solvency which is what everyone needs.
If you have more suggestions for budget planning and how to set up a budget, please leave them in the comments section below!
Wishing you much luck in your financial future!
More Tips on How to Set Up a Budget
- The Best Budget Software For You
The best budget software is the one that works best for you. That may sound tired, but its true. For software in general, the question always boils down to: accessibility and customization. Budget...
- Do I Need Personal Finance Budget Software?
The economy has tanked, people are losing their homes and few people have any savings left for that rainy day. The only action left is to budget expenses and regain a firm hold on personal finance. Some people...
- Do You Need Financial Budgeting Software?
If you are like most people, keeping track of your finances in the midst of your overly busy schedule can be a real challenge. Tracking finances can be difficult to do if you have limited tools. Using...
- How to Best Cut Your Bills - Track Personal Finance ...
When we are looking to save money we often forget the obvious, cut your personal expenses. Personal finance savings from shrinking bills has huge benefits psychologicaly and materially. BillShrink software is a home budget software online that helps
- 3 Highlighted Features of Financial Budgeting Softwa...
Recently, the world's innovation has been growing rapidly, we can get whatever we need in order to make our life more efficient within a click away. From software for designing a website to the software for...
- The Best Budgeting Software It Aint What Y...
These difficult times make finding the best budgeting software nearly as important as the decision to budget in the first place. If you are trying to find the best budgeting software the answers can be found...
- Best Family Budgeting Software--Free Download
I have heard all the excuses; used most of them myself. Budgeting is too hard. I forget to write stuff down. Do I really have to? Budgeting is NOT that hard. You can do this. Take a deep...
- Best Personal Budget Software - Budgeting and Track...
Personal budget software means finding the best expenses software for your personal finances. A home budget software helps you achieve your personal goals. Home finances can be a great source of stress find the personal financial software that lowers
- Track Personal Finances with Personal Budgeting Soft...
Using personal budgeting software to track personal financial helps you understand your real finacial situation. Taking responsibility for your finances helps you achieve personal financial goals and personal budget software from YNAB, Quicken and Mo
- Simple Tricks and Tips for Sticking to a Personal Bu...
People who are concerned about personal finance (and even many people who arent too concerned about it) know that the first thing that you need to do to deal with your own finances is to create a personal...
- Budgeting Tips: Great Ways For Kids To Make Money
WAYS FOR KIDS TO MAKE MONEY When you're a kid, you need spending money. Let's face it.....sometimes allowances aren't enough to cover all those things that you want to buy. Or maybe times...
- 5 Personal Budgeting Tips to Gain Control Over Your ...
Creating a personal budget can be a confusing and complicated process, however, it is essential for anyone wanting to take control of their personal finances. Following these five tips will help you create a...
- Budget Tips: 10 Top Budget Tips For Families
The beauty of families is that a family is a cohesive unit...or it should be. Families stick together through thick and thin and in hard economic times, thin might be easier to come by and the need for...
- How To Stretch Your Budget : Student Budgeting Tips
If you are a student, you know that your circumstances are limited and budgeting is considered a tedious and agonizing experience. I always say that because I experienced being a student until I finished my...
- Free Budget Worksheets
When you are watching your budget carefully, free budget worksheets just make sense. There are hundreds of websites on the Internet with templates that you can download for free and print out as much as...
- Four Steps to Setting up a Budget
Setting a budget can a difficult thing for anyone to do, it requires a discipline that most of us have trouble exercising. Try setting a goal such as an early retirement, or a special trip as these can...
- How to set up a Budget for Christmas
I got married about two years ago and soon after my husband and I returned from our honeymoon, we both read the Dave Ramsey book, Total Money Makeover. We quickly got to work and set up a plan to pay off all...
- BUDGETING YOUR MONEY - How to set up your budget to ...
Money Tip Number 1 Budgeting Your Money If you havent set up a budget yet, do it now. It is absolutely vital that you know exactly where your money is going. You work way too hard for your money...
More by this Author
Let's explore the difference between being frugal and being cheap. Which is better, cheap or frugal? And is there really a difference?
Using the envelope plan for budgeting is a great way to never overspend. It's also a great way to figure out how to "juggle" expenses in one category where you perhaps aren't spending as much and use money to...
A great way to grow potatoes in small spaces. Try growing potatoes in containers to save space and grow in an environment that's easy to maintain.