All of the money you bring in each month is called Income. Your salary, rips and even money that you get on a regular basis from family, investments, or anything else. Income doesn´t include gifts, bonuses, and things of that sort. So leave them completely out of your budget.
Necessity items are the items that you absolutely have to have, these include food, home, clothing, medical care, etc.
To create a budget, you will need to compare your regular income to the cost of necessary items. During this time, if you should see that your income is less than you need to pay for necessities you should try to lower costs or increase income, here are some popular posts to do this here. If you should see that your income is more than your cost of necessities, then you have money left over.
Use Budgeting spreadsheets
Budgeting spreadsheets are a perfect visual tool for keeping track of income and costs. Looking over these, you can see what you spend and how your costs compare to your income.
Keeping Track of Your Income
This budgeting spreadsheet is where you can track the money you bring in each month. If you’re not sure (because you earn tips that vary each month) you’ll need to keep a careful record for at least a couple of months. For now, though, you can estimate your tips.
| INCOME SOURCE | MONTHLY INCOME |
| Source 1: | |
| Source 2: | |
| Source 3: | |
| TOTAL: |
Keep Track of Your Necessary Expenses
This budgeting spreadsheet has all the bills you have to pay, although not all categories (like property taxes) will apply to all people. Many of these costs can also be reduced by shopping around. The miscellaneous categories are for you to fill in personal cost.
| NECESSARY EXPENSE | MONTHLY ESTIMATE | ACTUAL |
| Rent or Mortgage | ||
| Groceries | ||
| Utilities (electric, gas, heat) | ||
| Water and Sewage | ||
| Trash Pickup | ||
| Health Insurance/Co-Pays | ||
| Auto Insurance | ||
| Auto Repairs/Maintenance/Fuel | ||
| Public Transit | ||
| Phone (Landline and Cell Phone) | ||
| Loan Repayment | ||
| Homeowners/Renters Insurance | ||
| HOA fee | ||
| Property Tax | ||
| Life Insurance | ||
| Hair Cuts | ||
| Basic Toiletries | ||
| Child Care | ||
| Clothing | ||
| Retirement | ||
| Misc #1 | ||
| Misc #2 | ||
| TOTAL: |
Next Steps
Now you´ve written and seen how your income is with the necessary expenses, which means you are on your way to managing your budget!
Just in case you found that your necessary expenses are the same as or greater than your income, you’ll need to find more ways to save.
But, before you start cutting your costs, it is very important to get a full picture of what you really spend. VERY few people spend only on necessities.
Most of us enjoy saving a little money to give ourselves more flexibility. The good news is saving money comes easily once you know the areas you need to hit. You will get better at it! Keep going!
What is your way to save more? Do you have a specific system?
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