Setting up a budget for yourself or your family is very important. It should not be viewed as a way to punish yourself and reduce your spending. It should be seen as a way to stop wasting your money and use your money more effectively for the things you and your family really desire.
A good budget can help keep your spending on track and even uncover some hidden cash flow problems that might free up even more money to put toward your other financial goals. The hardest part of creating a budget is sitting down and actually creating one.
Gather Every Financial Statement You Can
Record All Of Your Sources Of Income
Create A List Of Monthly Expenses
Break Expenses Into Two Categories: Fixed And Variable
Variable expenses are the type that will change from month to month and include items such as groceries, gasoline, entertainment, eating out and gifts to name a few. This category will be important when making adjustments.
Total Your Monthly Income And Monthly Expenses
Make Adjustments To Expenses
If you are in a situation where expenses are higher than income you should look at your variable expenses to find areas to cut. Since these expenses are typically essential it should be easy to shave a few dollars in a few areas to bring you closer to your income.
Review your budget monthly
It is important to review your budget on a regular basis to make sure you are staying on track. After the first month, take a minute to sit down and compare the actual expenses versus what you had created in the budget. This will show you where you did well and where you may need to improve.