ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

How to Prepare a Budget Plan

Updated on May 23, 2012
When you're ready to get financially responsible, start with a basic budget plan.
When you're ready to get financially responsible, start with a basic budget plan. | Source

What is a budget plan?


A budget plan is simply a thoroughly written calculation of one’s expenses, savings and spending. Yet, this very simple concept can be tedious to write and difficult to follow through with consistently. If you are anything like me you have probably written several budgets but lost steam somewhere along the way. If you are ready to clear your mind of your bad experiences and start off fresh, you have come to the right place.


What are expenses?


Expenses are simply what it costs for you to live. Your life consists of several categories including health, bills, rent/mortgage, car, etc. Knowing how much each thing costs you a week, month and even year can help you prioritize spending and save money.


Knowing your due dates is a great way to avoid late fees.
Knowing your due dates is a great way to avoid late fees. | Source

What are savings?


Savings refer to money that is set aside each week, month or year. Often there are goals attached to savings (short term or long term). Other times, savings are simply set aside for emergencies or future expenses.


How to Prepare a Budget Plan


Step One: Keep Track of Spending


The very start to becoming financially responsible is to find out how much you spend. Writing down how much you spend and on what each day for 90 days ought to give you a clear picture of your spending habits.


Step Two: List Expenses


Once you understand your spending habits, lump common expenses together. For example, over the counter medicine, toiletries, hair products, salon visits and nail shop visits could be included in a category you could name self-care. Your light, gas and water bills could all be included in a category entitled utilities. A common list of categories for expenses might look like this:


  • Rent/Mortgage
  • Car
  • Utilities
  • Food
  • Clothes
  • Debt
  • Self-care
  • Health


Step Three: Savings Plan


Do you have any short term or long term goals in need of funding? How about retirement? Emergency nest egg? Make a plan for your specific goals and decide how much you can afford to contribute to these goals each time you are paid. While some goals may be easy to fund each month, others, such as retirement funds may require more research. Your Human Resources contact as well as certified financial planners can help you determine a realistic plan based on your specific needs.


Step Four: Monthly Budget


Use the information you gathered in your expense monitoring along with your saving plan to determine how much you want to reasonably spend each month/bi-monthly in each category. Your budget needs to balance. This means that it should equal no more than what your income will be for that month or two week period.


Using a pre-made budget journal, like my own Adams Home Office Journal,  can be very helpful because it lists all your categories and gives you a place to write in your daily spending.
Using a pre-made budget journal, like my own Adams Home Office Journal, can be very helpful because it lists all your categories and gives you a place to write in your daily spending. | Source

Not one to write it down? Try using Excel to create your budget!

Do you have a budget?

See results

Step Five: Manage Spending


Once you have your budget, in order to keep track of your spending, write down every time you spend in each category. This can be tiresome but trust me, this makes all the difference. I have found a budget journal to be extremely helpful for this. At the end of each day, I check in to my journal and add my spending for the day. Some people find keeping receipts helpful. This does not work for me. It make take a few months to find a routine that works best for you but keep with it and you will see progress in the area of controlling your spending and saving.


Step Six: Monitor and Adjust


If you notice that something has changed in your expenses or it is simply not enough money allotted for a certain category, adjust your budget. As long as you keep you budget balanced, you should be able to adjust as needed.


Comments

    0 of 8192 characters used
    Post Comment

    • Literary Geisha profile image

      Literary Geisha 5 years ago from Philippines

      very, very useful hub! i actually do keep track of expenses, although it's mostly for recording purposes than anything else (like so i'd know when i last bought a sack of rice, or how much i paid for the water bill the previous month). but i haven't really tried making a budget plan, because it *is* hard work - not to mention it involves dealing with figures, which i'm not very good at. :P

      thank you for sharing your tips with us, i've bookmarked this in case i "lose steam" somewhere along the way. :D

    • mwilliams66 profile image

      mwilliams66 5 years ago from Left Coast, USA

      Krystald, thank you for posting this very comprehensive look at budgeting. I was once very good about allocating money and tracking expenses. I became quite lax about it in recent years. Your hub has fantastic tips that I shall surely use to set up a current budget.

    • KrystalD profile image
      Author

      KrystalD 5 years ago from Los Angeles

      literary geisha, facts and figures have never been my strong suit either but the more I practice budgeting, the easier all that has gotten. I am glad you found this useful :)

      mwilliams, welcome to HubPages! I hope this hub helps guide you as you get back on track :)

    • teaches12345 profile image

      Dianna Mendez 4 years ago

      This would make a great class for high school students getting ready for college. It would really help them to make the best of their life when they venture out on their own. Great topic and filled with valuable information.

    • KrystalD profile image
      Author

      KrystalD 4 years ago from Los Angeles

      Thanks teaches :) I really think personal money management should be taught starting in middle school. Kids need to be given tools for financial irresponsibility as soon as possible to combat the material insanity out there!

    • Vinsanity100 profile image

      Vinsanity100 4 years ago from Michigan

      Being in college for the last few years and living on my own I have come to love my budgets. I like to get everything out of my mind and onto paper so I can enjoy myself and not think about my fiances every second.

    • profile image

      Hareiana 4 years ago

      Out Of The Dark (OOTD) is a free web app that makes personal budgeting and cash management as easy as it can be. I have been using it for over 2 years now and it helped turn me from a hopeless money handler to a good budgeter with tangible benefits like getting out the debt prison and having more money for the things I want instead of paying it on interest.

    • HoneyBB profile image

      Honey Halley 4 years ago from Illinois

      These are great tips for people to learn how to budget their money. I really like the pre made budget book too. I think people might be able to make a budget plan book of their own through Microsoft but I'm not sure about that.

    • KrystalD profile image
      Author

      KrystalD 22 months ago from Los Angeles

      Vinsanity100, managing your finances independently really makes us wake up and get clear about our finances. How is it going now? Do you still write it all down? I find it difficult to stick to but I always come back to these methods because they work.

    • KrystalD profile image
      Author

      KrystalD 22 months ago from Los Angeles

      HoneyBB, I was first introduced to this booklet by a good friend and its been a guide for me for years. Though I choice to write it all out by hand in a spiral notebook, the concept given here really gives direction. I know people who swear by their Microsoft software for this kind of tracking and it seems to work great for them.

    Click to Rate This Article