Making a budget can be more complex when more than one person is involved.
Budget is not a dirty word. It can be a lovely word, and one that you will grow to love, once you learn its benefits. A simple monthly budget provides a snapshot of your financial well being, helps you take charge of your finances, and helps reduce or even eliminate those nasty surprises, like late fees for paying your electric bill after the due date. Setting up a monthly budget doesn't have to be complicated, but it does take a little time.
Instructions
1. Track your spending habits. Before you can create a workable budget, you must know how you are currently spending your money. Buy a blank notebook that is small enough to carry with you everywhere you go and use it as an expense diary. Every time you spend money, make a note in your notebook of the date, the amount and the purpose for the purchase. Remember to include any automatic payments that come out of your bank account, such as insurance or automatic drafts for your mortgage or utilities. Keep track of all of your expenditures for two months. This will give you a good picture of where your money goes every month.
2. Categorize your expenses. List necessities such as food, shelter, utilities, transportation and clothing first. Use your expense diary to determine other relevant categories, which may include student loans, bank loans, credit cards, insurance premiums, recreation and charitable giving. You may have more categories, fewer categories or different categories. The important thing is to account for every dollar you spent in the appropriate category. Once you've listed all of your categories, place all of the expenses from your expense diary into the appropriate category. Now you have a snapshot of where you spend your money.
3. Determine your income. If you work a 9-to-5 job and get paid once per month, this step is easy. If you work on commission, get a quarterly bonus, earn dividend or interest income, or have other irregular sources of income, this step can be a bit more challenging, but it is important to know how much spendable money you have coming in every month. Fold a sheet of paper in half, vertically. On one side make a list of all sources of income, net amounts after withholding, and frequency of payments. Add all of your monthly income from all sources. This will give you a snapshot of how you earn your money.
4. List your budgeted monthly expenses on the other half of the sheet of paper. Use your list of categorized expenses to determine how much you expect to spend each month in each category. Upon examination of your spending habits you may realize you spend too much in one category, such as eating out, or underestimate how much your electric bill is each month. Make adjustments as necessary to create an accurate and livable list of budgeted monthly expenses. Add your expenses and compare the total to your monthly income. If your total expenses exceed your total income, you are living above your means. You will either have to increase your income or cut your expenses.
