Building a Budget
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Building a Budget
To build a budget, you need to start by gathering information about your income and expenses. The best way to get information about your income is to get a copy of your pay stub; if you have other income, such as child support or alimony, check your bank statement for the deposit amounts or the state online Website where payment information is stored.
Things To Know
- To start working on a budget, gather information about your income and expenses.
- Revising a budget helps keep it in line with your actual income and expenses.
- Budgets need to be adjusted when expenses, income or circumstances change.
Then, start to pull in information about your expenses. Your checkbook or online banking bill pay system is a good place to start. You’ll want to include all your bills, such as mortgage or rent, taxes, property, health and car insurance, utilities, car payment, daycare expenses, credit card and other loan payments, entertainment, phone and cable bills, clothes, haircuts, groceries, and any other expenses you have.
Revising a budget is part of the budgeting process and helps keep it in line with your actual income and expenses. To make changes in a budget, just add in new expenses or subtract expenses that you don’t have any more, or make adjustments in what specific expenses cost. The same holds true for making adjustments in income.
Here’s an example of a simple monthly budget:
You can use a similar worksheet to calculate your budget:
In the case of the sample budget, there is a surplus. You divide that surplus into two and put half in your emergency fund and half into your retirement plan. Then, if after a month or two it seems like your expenses are higher than you thought, you can allocate some of that money back into the categories that were more expensive than you thought. Just make sure that you are being disciplined about your spending before you allocate less to savings.
