Last week I started the first part of my series on budgeting and here is the second part. You can find the first part here:
Budgeting Part 1.So, now that you have tracked your expenses for at least a week, you are ready to start working on your monthly budget. I have provided a spreadsheet for you. You can either click on the
Word 2007 version or the
97-2003 version. The first page is the Expense Page, the second is the Expense summary which adds them all up for you , and the third sheet is the Monthly Budget sheet which we will be working on today. You can also do this on paper if you so choose. Just list your income for the month and total. List your expected expenses for the month and total. Subtract expenses from income and this is how much you have at the end of the month.
Basically what you are doing is adding up your month's worth of income subtracting the expenses and seeing how much is left over. On the spreadsheet, I put savings at the end, so that if you have extra money at the end of the month you can put it in savings. You may want to automatically put a certain amount in savings a month no matter what and I have provided extra space on the spreadsheet in case you would like to consider it an expense.
In case you downloaded my spreadsheet to use, I was going to walk you through how to fill it out. The first step is to fill in your income for the months. This is pretty easy if your income is steady. If, however, it changes, you may just want to approximate. You can always change it later. Other Income can include such things as income tax refunds, rebates, commission checks, bonuses, etc. The program will automatically sum your income up for each month.
The next step is to work on your expenses. Using your expense summary come up with how much you think you would like to budget for the month in each category. Take into account things that don't happen on a regular basis, like car inspection fees, car maintenance (oil changes, tuneups, etc), school expenses, etc. What I do with these expenses is figure out when I need to pay them and how many months until then, then I take the amount and divide it by the number of months remaining to get how much I should be saving monthly for these expenses. For example if I know I will have to pay my car registration in November I take the $70 and divide it by the remaining months, 7, and put away $10 a month.
The spreadsheet will total your expenses automatically and then it will show you how much money you have left each month. Fill in the savings and/or the vacation percentage if you would like to save for these things. The spreadsheet will also let you change the name of the savings if you would like. This is the percentage of the leftover money that you would like to save. If your Income minus Expenses is negative or you don't have a lot to put into savings, you need to start looking at your budget and finding ways to to trim your budget. The easiest places to start looking to trim are food, household, and leisure type activities. Also look at how much you are spending on eating out.
So there you have it. That is how you do a budget. Just remember that a good budget is constantly changing. If your expenses go up, make sure you change it on the sheet. If you have any questions or comments or anything you would like to add, leave me a comment.
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