Decreasing Expenses
If your expenses exceed your income, you will have to cut expenses or increase your income. If finding more income is not realistic, focus on decreasing your expenses. The trick is doing this without depriving yourself of items or services you truly need.
April 22, 2009
How to create budget
How to create your budget.
1. Determine the categories into which your expenses fall (see the chart below for suggested categories.) List your categories of expenses down the left side of a piece of paper (or Excel spreadsheet). Use as many sheets as you need to list all categories. These are your budget sheets.
2. On the sheets containing your list of categories, make 13 columns. Label the first one "projected" and the remaining 12 with the months of the year. Unless today is the first of the month, start with next month.
3. Using your total actual expenses for the two months you tracked and the other expenses you added, project your monthly expenses for the categories you've listed. (Make a note of when smaller expenses, such as magazine subscriptions, are due so you can adjust your budget for that month. These temporary adjustments make more sense than trying to save $1.23 each month to cover an annual magazine subscription.
4. Enter your projected monthly expenses into the "projected" column of your budget sheets.
5. Add up all projected monthly expenses and enter the total into a "Total Expenses" category at the bottom of the projected column.
6. Enter your projected monthly income below your total projected expenses.
7. Figure out the difference.
1. Determine the categories into which your expenses fall (see the chart below for suggested categories.) List your categories of expenses down the left side of a piece of paper (or Excel spreadsheet). Use as many sheets as you need to list all categories. These are your budget sheets.
2. On the sheets containing your list of categories, make 13 columns. Label the first one "projected" and the remaining 12 with the months of the year. Unless today is the first of the month, start with next month.
3. Using your total actual expenses for the two months you tracked and the other expenses you added, project your monthly expenses for the categories you've listed. (Make a note of when smaller expenses, such as magazine subscriptions, are due so you can adjust your budget for that month. These temporary adjustments make more sense than trying to save $1.23 each month to cover an annual magazine subscription.
4. Enter your projected monthly expenses into the "projected" column of your budget sheets.
5. Add up all projected monthly expenses and enter the total into a "Total Expenses" category at the bottom of the projected column.
6. Enter your projected monthly income below your total projected expenses.
7. Figure out the difference.
Monthly Income
Determine monthly income.
Finally, multiply the net amount by the number of pay periods to determine the monthly amount. For example, if you are paid twice a month, multiply the net amount by two. If you are paid every other week, multiply the amount by 26 (for the annual amount) and divide by 12.
When you are done, total up all the amounts. This is your total average monthly income.
After you keep track of your expenses and income for a few months, you're ready to create a budget. Your goals in making a budget are to:
* control your impulses to overspend, and
* start saving money.
related articles:
Crude Oil
Income
Budgeting
Net Income
Best of way to do when making your Budget
Finally, multiply the net amount by the number of pay periods to determine the monthly amount. For example, if you are paid twice a month, multiply the net amount by two. If you are paid every other week, multiply the amount by 26 (for the annual amount) and divide by 12.
When you are done, total up all the amounts. This is your total average monthly income.
After you keep track of your expenses and income for a few months, you're ready to create a budget. Your goals in making a budget are to:
* control your impulses to overspend, and
* start saving money.
related articles:
Crude Oil
Income
Budgeting
Net Income
Best of way to do when making your Budget
Net Income
Record net income.
Next to each source of income, list the net (after deductions) amount you receive each pay period. If you don't receive the same amount each period, average the last 12.
Next to each net amount, enter the period covered by the payment -- such as weekly, twice monthly (24 times a year), every other week (26 times a year), monthly, quarterly, or annually.
Next to each source of income, list the net (after deductions) amount you receive each pay period. If you don't receive the same amount each period, average the last 12.
Next to each net amount, enter the period covered by the payment -- such as weekly, twice monthly (24 times a year), every other week (26 times a year), monthly, quarterly, or annually.
Income
Total Your Income
Your expenditures account for only half of the picture. You also need to add up your monthly income.
On a blank sheet of paper, list the jobs for which you receive a salary or wages. Then, list all self-employment for which you receive income, including farm income and sales commissions. Finally, list other sources of income, such as:
* bonus pay
* dividends and interest
* alimony or child support
* pension or retirement income, and
* public assistance.
Your expenditures account for only half of the picture. You also need to add up your monthly income.
On a blank sheet of paper, list the jobs for which you receive a salary or wages. Then, list all self-employment for which you receive income, including farm income and sales commissions. Finally, list other sources of income, such as:
* bonus pay
* dividends and interest
* alimony or child support
* pension or retirement income, and
* public assistance.
Best of way to do when making your Budget
Staying on track
Don't think of your budget as etched in stone. If you do, and you spend more on an item than you've budgeted, you'll get frustrated and be more likely to scrap the budget altogether.
Be willing to sacrifice.
You may have to sacrifice some things that feel important to you. But don't expect to stick to your budget if you take away all but the essentials. Be realistic.
Don't think of your budget as etched in stone. If you do, and you spend more on an item than you've budgeted, you'll get frustrated and be more likely to scrap the budget altogether.
Be willing to sacrifice.
You may have to sacrifice some things that feel important to you. But don't expect to stick to your budget if you take away all but the essentials. Be realistic.
Budgeting
Drafting a personal budget is one of the best ways to control your spending. Until you know what you earn and spend, you can't figure out how to live within your means. Don’t be intimidated by the process. Creating a budget can be simple and easy. For information on budgeting,
Subscribe to:
Posts (Atom)
