How to Create a Budget

Many people know that they need to have a budget, yet when it comes time to actually prepare one they would rather go to the dentist! When economic times are hard it is even more important to create a budget, so we will give you tips on how to create a budget. If you hope to have extra cash to put into a savings account for emergencies living within a budget will be crucial. If you plan your budget in a logical and methodical way you can actually have a bit of fun trying to save money.
The first thing you must do is find out where your money goes. You may think that you already know this, but in reality very few of us do. Start a log of what you spend in a month. It should include the recurring monthly bills, food expenditures, gas for your vehicles and the miscellaneous items like your lattes, etc.
Then record how much income you have every month. This can be from your job and any other income source you may have on a regular basis. Once you know how much money you have to work with and where it all goes you can begin making a budget plan.
Next on the list of things you need to do is gather the paperwork from bank statements, credit card bills, any investment accounts you may have, and utility bills, and add to this an estimate of what you spend on food and gas in a month. This is easily done when you take the grocery receipts from an entire month and average the cost. The same can be done with your gas receipts. Take note on whether or not you made extra trips that could be eliminated or if you took a vacation even if was just for a weekend. Refer to the log that you made in the beginning to see if there is any more information you might have paperwork on. Seeing figures in black and white makes it real!
If you are self employed you will need to have money saved up for the end of year taxes so making a budget should be a necessity for you. If you have estimated taxes that need to be paid you should include those in your expenditures.
Once you have gathered all the information it is time to list it in some semblance of order. List all your monthly expenses in order of when they come due. This way you shouldn’t miss anything. Once everything is listed you want to further split them into a fixed and variable category. Fixed would be your mortgage, car payment, any insurance you have, cable TV, internet and so on. Gas, food, emergencies that arise or other payments that can change should be put into a variable column.
Now total the income and expenses to see where you stand. If expenses outpace income you must change your lifestyle. When you learn how to create a budget, you can see where you can cut back to save money for your yearly taxes or a weekend to relax. Review your budget regularly to see if you are staying on track. If not, make the needed adjustments.

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