Wednesday, November 4, 2009

How to Set Up a Budget

Setting up a budget can be intimidating. It might be difficult to figure out where exactly to start. I decided to do a couple posts on budgeting to give you a few tips and also to show you how we budget in our household. Here are a few suggestions to get you started.

First, keep a journal of everything you buy for 1 week. Every cup of coffee you buy or lunch out. Then take this amount times 4. This will give you an estimate of what you spend on little things in 1 month. If you think a week isn't long enough write it down for 2 weeks or even a full month. You will be surprised how fast those little things add up.

Figure out your monthly income by taking your last 3 months worth of check stubs. Add them up together after taxes and divide by 3. This will be your monthly income.

Then you will need to move onto your fixed expenses like mortgage or rent, car payments, and loans. For utilities, take the last 3 months bills and figure the average.

Then you want to figure in your expenses on groceries, fuel, medical expenses, clothing, credit card payments, ect. Now is a great time to evaluate your expenses and your weekly journal. Is there anything you can cut back on? If you have credit cards try and switch them to lower interest rates and get them paid off as soon as possible.

Here are a few links with some helpful budget worksheets to get you started here and here.

Unexpected expenses come up. But try to stick to your budget. It will help you stay on top of your financial situation and help you see exactly where your money is going.

My next post will show you exactly how we budget in our household. This post is linked to Frugal Fridays at Life as Mom.

1 comment:

  1. Thanks for sharing. I am looking forward to the posts.