How to Make a Budget - Simple Tips to a Flexible Budget
Posted: Wednesday, February 25, 2009
by Samantha Buck
Life Organize It
Here are some super simple tips on how to make a budget using a household budget worksheet. As simple as these tips may be, they also give you power over your finances relieving your financial stress and worries. Power and control that comes from knowledge of your money.
When you learn how to make a budget, you take control over your finances. A simple, yet flexible budget gives you knowledge of your finances, you know how much money is coming in and you definitely know how much is going out and on what. It's that simple. With the knowledge a household budget provides, you can spot trends such as if too much money is going out, you can see where the money leaks are and put a stop to them fast.
Now that you have your three months of income and expenses, you'll also want information about your big bills like car insurance, car registration, also mortgage insurance and property taxes (if these aren't paid out of an impound account). Gather all the info on your "big" bills and list out the payee, payment amount, and when due.
To set up your budget, you're going to work on a monthly basis as follows:
First, divide your expenses into variable and fixed expenses.
For the variable expenses, you're going to take an average of the three months and plug that in as a monthly expense.
Detail out all of your fixed expenses per month.
For the "big" bills mentioned earlier, total these up and divide by twelve months. Include that amount as a monthly fixed expense bill.
Detail out all of your income per month.
Look at what money you have left over. You'll use this money to pay off debt, or put in a savings account.
Now it's time to take back control of your money. Look at the variable expenses and cut them. The amount you will need to cut is individual. For instance, if you're in debt, or out of work, or both, then you'll need to make drastic cuts down to the bone. If you have just a little consumer debt and have a decent job, then your cuts won't need to be as drastic. So, if you need to cut, then cut out all variable expenses... no dinning out, no movies, cut your own hair, shop at can food outlets for groceries, don't buy anything new, etc.
Keep in mind as your cutting variable expenses that it's nice to know that this is only a temporary situation and won't last forever. And, on the positive note, you'll come away from this with a developed household budget and in control of your money and spending.
That's it to making a budget... gather income and expense data, list it out, see where you can cut and watch spending trends.
Take your power back over money and learn how to make a budget!
Samantha Buck is a Professional Organizer and Editor of http://www.LifeOrganizeIt.com, where you can find solutions to life's organizing dilemmas. Subscribe to the free organizing magazine "Organize It Mom!" at http://www.lifeorganizeit.com/free-e-zine.html for super easy tips and techniques to get yourself organized. Not just for moms, this free organizing magazine will help anyone get organized!
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