How did you prepare and plan for budget?

Answer 1

step 1

Create a list of all your regular expenses that are basically the same every month. These include utilities, credit cards, rent, cable, internet, and car payment. Type or write these down in a column under the heading "Regular Expenses." Double-check it to make sure you aren't leaving out any automatically deducted items, like a Netflix or gym membership.

Step 2

Add expenses that vary from month to month. These include food, gas, and pet expenses. Estimate the monthly amount of these by looking through old bank or credit card statements. Make sure you estimate high and round up so you'll always have more than you need.

Step 3

In the next column, create a list of your sources of income. These include salary, child support, residual income, freelance income---any money that is coming in that you can spend freely. If these amounts vary, estimate to the best of your ability using old check stubs or online records. Estimate conservatively for these---you don't want to create the illusion that you have more money than you do.

Step 4

Subtract expenses from income. You can do this automatically in Microsoft Excel by using the AUTOSUM function, or you can use a calculator. If this amount is negative, it means you are living above your means. You either need to cut some of your unnecessary expenses, like extended cable or Internet, or find a way to make more income.

Step 5

Figure out if your expenses are balanced. According to Jean Chatzky, a financial guru featured on Oprah Winfrey's "Debt Diet" series, your income should ideally be segmented as such: housing 35%; savings 10%; other living expenses (food, entertainment, clothing) 25%; debt 15%; and transportation 15%. See how your expenses add up. Having a balanced budget that incorporates savings and makes sure you aren't spending too much on housing and transportation will help eliminate debt and alleviate stress.