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How To Make Budget

Updated on October 22, 2011

That’s what happens when you don’t make a budget. You end up spending 300$ when out to buy grocery because this leather jacket that you saw in the market was the best you had ever seen and since you had money in your wallet you just could not help yourself.

You had to buy it.  And it happens every month. You get the salary but at the end of the month you find yourself wondering and getting worried where all the money went, when nothing is left at the end.

Every time you get the salary, you promise yourself that this time you would spend it carefully, but, yet again you end up letting the money slip from your hands. But it would never be possible unless you make a budget.

What Is A Budget?

By its definition, the term budget refers to a list of expenses and revenues planned. In general terms it is just a way of planning how to spend and save money.

Making a budget is very important. And it becomes almost impossible to handle ones expenses if an accurate budget is not made. Budgets do not only hold an importance in strategizing ones business financial status but it holds an equal importance in handling a common mans monthly income.

How To Prepare A Budget?

Preparing a budget is an easy task. The problem is that usually people fail at making the accurate budget because they do not know how to. There are many ways one can make a budget. following are few steps regarding as to how a budget should be made:

  • Firstly make a list of your regular monthly expenses. This includes your house rent, monthly bills and basically the expenses that are regular monthly. Make a column, label it as the regular expenses and add the list in this column.
  • Now make a column of varying expenses, this would consist of all the expenses that vary month to month. For example the money expected to be spent on food gas and other such expenses. Be sure that the amount you write must be a little more than you have estimated. Just to be on the safe side.

  • Now make a column of your source of income. Things would be easy if you have one. But if you have multiple sources, make a list of those.
  • With all the above being done, calculate the expenses and the total income.
  • Now subtract the expenses from the income. That can be done using a calculator. The result would suggest where you stand. If it is in negative then you are clearly above the mark and you need to make some deductions. And if it’s not, then well done. You would save money by the end of the month.

There is another simple way of making a budget:

  • If you have a steady job, write down your income. It you income varies, then estimate the minimum and pen that down.
  • Now make two columns. One should consist of the list of things to be spent money on. The other should have the amount to be spent.
  • Start writing down. Important things such as bills and rent should be written on the top.
  • Next write down the expenditure on food, oil or gas.

  • The remaining things might include all the things that you intent to do or are to be done. For example car repairing, traveling and stuff.
  • Calculate the expenses and subtract it from the income. That would tell the saved amount.

The above procedure can be demonstrated in the following example:

Joey, a college student who works as a bartender, estimates his monthly income to be approximately 1500$. That is probably the minimum that he could earn.  That’s how he makes his monthly budget:

Total income
1500$
Apartment rent
200$
College expenses
250$
Electricity and phone bill
80$
Cable
40$
Food
150$
Entertainment
150$
Gas
120$
A haircut
90$
Total expenditure
1080$
Money saved
420$

Simple wasn’t it? Making a budget as said earlier is not at all difficult. The above two ways are simple and do not require much of an effort. A simple pattern can be used by some one handling a family; it is after by the end of the knowing your income and planning your expenses accordingly.

Tips On Making A Family Budget

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    • hassam profile image
      Author

      hassam 8 years ago from Pakistan

      Thanks for reading. Yes, these are just examples so don't worry about them! :)

    • tim-tim profile image

      Priscilla Chan 8 years ago from Normal, Illinois

      Having a budget and living within its means would be good but hard. Where can you rent a place for $200, LOL? I know it is just an example:) Thanks for the hub.

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