Format: For those that have Microsoft Office, I would encourage you to use excel for your budget. For those that don't (including me) Google Docs has a spreadsheet option as well, and it's free.
Preparation: In order for your budget to be accurate you'll need to take a week to do some prep work. Frequently what we "think" we spend on things isn't actually reality...therefore it's a good idea to take one week and write down everything you spend during that week. Don't try to skimp to make the numbers different. For now, just write everything down. Once the seven days are done you will have some more accurate numbers and can begin creating your budget.
Categories: Using the numbers you've gained during the preparation period, begin creating some categories. Below are the categories we have in our budget:
- Cell phone
- Water/Sewage/Trash expenses
- Amazon Prime/Netflix
- Food/Groceries
- Electricity
- Gas/Auto Expenses
- Annual or semi annual car taxes
- Insurance
- Cable/Internet
- Car Payments
- Mortgage/Rent
- Costco or other similar memberships
- Tithing
Depending on your situation you may not have some of these categories and you may need some more, like student loans or alimony.
For some of the categories, you'll need to estimate at first (such as food and gas) for others (like Electricity and internet) you can find these monthly numbers by looking back at your statements.
Set up your spreadsheet with 12 columns-January through December. Each row will then be a category (food, gas, etc)
Once you feel like all your annual expenses are represented you are done with that portion and can move onto the income portion.
Under the income section you will want to include your monthly income AFTER TAXES.
Finally, for each month, subtract the total expenses from the total income and you have you net savings for each month.
We also include a "fun money" category, which is totally up to you. This category just includes our monthly allowance for fun things (Starbucks, clothes etc)
Also, some of the categories, like Taxes and Insurance will only appear one or two times on your budget throughout the year since you don't pay them every month.
Now that you are done you can see determine if you want to tweek anything. For example we realized that we spend a lot of money each month on food and so I decreased the amount I was willing to spend on that each month and am now keeping that number in mind when buying groceries etc.
Having a budget not only shows you where your money is going, but it also allows you to make plans and goals for the future
Here is an example of what one month should roughly look like:
January
Income: $4,000
Expenses:
Cell Phone: $100
Water/Sewage $30
Trash $15
Netflix $8
Food $400
Electricity $180
Gas $400
Car Payments $700
Mortgage $1500
Gym Membership $30
Tithe $250
Total $3613
Monthly Savings: $387
Hopefully this post helps you start on a budget and see where your money goes each month!
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