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Start by assembling past paycheck
stubs, dividend receipts, etc., to determine your income. A survey
of the previous three months is usually good enough to establish
this.
Next assemble two to three months
worth of expenses. Get all of your bills together, your checkbook
register, receipts, etc.
Step 2: Determine the Time
Frame
Decide if you want to budget
weekly, by the paycheck, monthly, quarterly, etc. How often you
get paid may heavily influence this decision. Most people just
budget by the month. Remember that you may have some expenses
that happen quarterly, semi-annually, or even annually, things
like insurance or car registration. You'll need to plan accordingly
(see Step 5).
Step 3: Choose a Tracking
Method
Choose a method for tracking
expenses (and income, if desired). Simple Joe offers the Expense
Tracker PC software as an easy and user-friendly way to track
expenses.
Quicken and MS Money are also
good tools if you are pretty computer literate. You can also
set up a spreadsheet program, if that's something you enjoy doing.
You can even use good old pencil
and paper. Do whatever will be easiest for you to maintain.
Step 4: Establish Categories
Select categories that fit your
needs. Some people like just a few categories, some use a multitude
of categories, others use subcategories. It really depends on
how detail-oriented you want to be. General categories might
include: auto, house, food, medical, insurance, utilities, etc.
Specific categories (usually best as subcategories) could include:
auto-insurance, fuel, maintenance; food-groceries, takeout, dining
out; etc. You can always add or remove categories or subcategories
later.
Step 5: Establish Spending
Amounts
Review the income and expenses
that you gathered. Put the expenses into the categories you have
established so you can see where you've been spending. Total
them and compare them to your income. How have you been doing?
If you're overspending, determine where you can cut.
Establish new budget amounts
for the time period you have chosen based on past expenses. Remember
also to budget for quarterly, semi-annual, or annual expenses.
(Example: you pay your car insurance every 6 months; divide that
payment by 6 and budget that amount every month; put it aside
where it won't be spent!)
Try to be flexible in your budgeting.
Budgeting every last penny you earn may not be the best course
because there are always unpredictable expenses that pop up.
Be sure to budget some savings, even if all you can save is $5
a month. It's great to get into the habit of paying yourself
first.
Step 6: Track Your Income
And Expenses
Whether it's daily or weekly,
or just every few days, you need sit down and enter your expenses
into your tracking method. If you put it off too long it will
become too overwhelming and you'll give up.
Devoting just a few minutes
a day is a lot better than three hours at the end of the month!
Keeping close track of your expenses will also help you to stay
in line with your budget. You'll be more aware of your money
and more careful not to spend what you don't have.
Remember to collect receipts
for everything, especially things you buy with cash. This will
make tracking a lot easier. If a receipt has purchases that fall
into more than one category, divide them up accordingly.
Step 7: Revisit the Budget
Often
Revisit your budget periodically.
Review your expenses. See what's working and what isn't. Rework
the numbers as necessary. If you are single, this should be pretty
easy. However, if you are married, you may have one or two incomes
in your household; both people should know where the money is
going, regardless of who is earning it.
Finally, remember that budgets
are not set in stone. You are in control, not your money. Make
it a goal to live within your budget. You can do it!
© Simple Joe, Inc. |
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