Use your budget to keep track of expenses and bills.
A budget does more than keep you from spending more than you earn. It also lets you set financial goals and pursue them. When you create a budget, you can firmly tell yourself that you will save "X" amount for retirement or an emergency fund each month, then plan the rest of your expenses around your savings goal. A budget also allows you to plan to get out of debt or to plan for something enjoyable, like your family vacation.
Instructions
1. Determine your total net monthly income. If you receive a single paycheck once a month, all you need to do is look at the amount of your take-home pay. If you have multiple income sources or get paid on a different schedule, you will have to do some math. For example, if you get paid bi-weekly, multiply the net amount of your income by 2.167 to determine your monthly income. If you are paid weekly, multiply the amount of your paycheck by 4.333. You can use the previous year's tax return to estimate your income if you are paid more irregularly. Divide the total income amount by 12. Record the amount of your monthly income.
2. Add up all your necessary expenses, such as your rent or mortgage payments, utility bills and groceries. Add in less necessary expenses, such as restaurant meals, entertainment and technology. Also include your savings goals and debt payments with the rest of your monthly expenses. Include savings for an emergency fund and retirement, and add in expenses that occur quarterly or semi-annually, such as car insurance or memberships. Determine the monthly amount of a quarterly expense by dividing by four. Determine the monthly amount of a semi-annual payment by dividing by six. Record the total amount.
3. Compare the amount of your monthly income to your total monthly expenses. Make adjustments as needed to make the income equal to the expenses, or preferably higher than your expenses. You may need to reduce your unnecessary expenses slightly, adjust your savings goals or even find a way to earn more income to make up the difference if your expenses are more than your income.
4. Use budgeting software or a spreadsheet to track your budget every month -- you can find downloadable templates for spreadsheets online or use a online budgeting program -- or track your budget by hand using pen and paper.
5. Review your budget regularly. Make changes as changes occur in your life. When you get a raise, for example, determine how you will use the extra income. If you pay off a debt, reallocate the money that you once used to pay the debt. For example, use the money to boost your retirement savings or to save for a vacation.
