postheadericon How to Create a Working Budget

Two Methods:Budgeting HelpCreating a Working BudgetCommunity Q&A

A budget is a great way to take control of your finances and save for some goal or maybe just get out of debt.

Budgeting Help

How to Create a Working Budget

Sample List of Expenses

How to Create a Working Budget

Sample Low Income Budget

How to Create a Working Budget

Sample High Income Budget

How to Create a Working Budget

Sample Family Budget

How to Create a Working Budget

Sample Club Budget

How to Create a Working Budget

Budget Tips and Tricks

Creating a Working Budget

How to Create a Working Budget

1 Calculate how much money you earn in a month after taxes. For this budget plan, use your net pay or take home pay. Include tips, supplementary income, side-jobs, investments etc. This is your income.

How to Create a Working Budget

2 Calculate your expenses. Save receipts for a couple of weeks or a month. Knowing your monthly expenditure on groceries or gas (for example) makes the next step much easier. If you want to start writing your budget today, and don’t have receipts, it is possible, just slightly more difficult.

How to Create a Working Budget

3 Set your goal. Defining a goal makes it easier to stick to your budget, and gives you a way of measuring your success or failure in meeting it. Why are you going on a budget? Maybe you want to start saving for college, or maybe you want to get out of debt.

How to Create a Working Budget

4 Divide your budget into basic categories. For example: Housing, Food, Auto, Entertainment, Savings, Clothing, Medical, and Miscellaneous. You could also organize your expenses into needs – such as your loan and electricity – and wants – such as clothing and entertainment.

How to Create a Working Budget

5 List all your spending for each category. Let’s take Auto as an example: $300/month car payment, $100/month insurance, $250/month on gas, $50/month on maintenance, 10$/month on fees such as registration. So, your total Auto budget for the month would be $710/month. If you don’t know the exact amounts you spend, make good estimates. The more accurate you are, the more likely you are to keep to your budget plan.

How to Create a Working Budget

6 Add up all your spending by categories. This should show your total monthly spending. Compare it to how much you make each month after taxes.

How to Create a Working Budget

7 Decide on a method to keep track of your budget. You can use a good old-fashioned ledger book, available from a general shopping center for about $5. Some people prefer to use computer programs like Quicken or Microsoft Money.

How to Create a Working Budget

8 Set up your ledger. Leave the first 5-odd pages blank, we’ll come back to them later. Divide the rest of the ledger into as many sections as you have main categories. Put each main category on the first page of each section. This will give you room for lots of entries in each category. Multiple transaction categories, like food, are going to need lots of pages.

How to Create a Working Budget

9 Decide how long your budget plan must last. I found monthly to be the most useful for me, since most bills are monthly. However, I decided to make the deposits to my budget categories twice a month. In other words, if my Auto budget for the month is $710, I showed “deposits” of $355 in the Auto section on the 1st and 15th of each month.

How to Create a Working Budget

10 Show a deposit in each category at the start of each period, then show all the expenditures from that category throughout the period. So, for Auto, you would start off with $710 for the month, then show several expenditures for gas, one expenditure for car payment, maybe one expenditure for insurance(depending on whether you pay insurance monthly or not).

How to Create a Working Budget

11 Use that first section of the ledger book to record income and then show the budget being subtracted from it each period. For instance, I get paid every other Friday, so there are corresponding entries in the income section showing income deposits every other Friday. My budget is $2,800/month, and gets subtracted on the 1st and 15th. So on each 1st and 15th, the income sections shows a budget subtraction of $1,400.

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