Ideas for Creating a Budget

Include Everything

A budget is only useful if you include all of your expenses, bills and income when creating it. Start by figuring in every expense you know of for the coming month including food, gasoline, entertainment events you have already planned and home or auto projects. Create a budget entry for monthly savings and only use that fund in case of an emergency. Try to plan vacations and holidays far enough in advance where you can save small amounts of money over time as opposed to having to come up with one large lump sum at once. Plan for every possible scenario in order to make your budget effective. Remember to include all expenses such as the coffee you buy on your way to work each morning and the lunch you buy during the day. When you put all of your expenses on paper, it makes it easier to eliminate the ones that you consider to be unnecessary.

A computer spreadsheet can make administering your budget easier and more accurate. Companies such as Microsoft and other spreadsheet manufacturers offer templates you can use and modify to start creating your own budget spreadsheet. A spreadsheet can be programmed to automatically adjust your income and expense numbers as you remove items that have been paid throughout the course of the month. This makes tracking your spending easier and helps you to see where your money is going.

A budget is not going to create additional income for you. The purpose of a budget is to help you use the income you have to help reduce your debt and be able to pay your bills and expenses. As you apply additional funds to certain debts, those debts will start to get paid off and will eventually fall off of your budget. But always keep your budget within your income means. Do not assume that you will be able to find additional funds from somewhere to meet your desired budget. Use the income you have and keep your budget within your means.

Your income and your spending may fluctuate from month to month, but you need to use your budget as a way of monitoring your spending and alerting yourself to bad spending trends. Keep track of the gap between your income and your spending. That ratio should be constant. If you notice the spending portion getting slowly higher, then start to curb your spending habits. Use your budget as a tool for making sure you keep yourself out of debt.