A budget that works is a realistic budget. But, a functioning budget also offers a certain amount of latitude as well. It not only directs you toward your savings and investment goals, it also offers alternatives if you hit a bump in the road and must redirect your efforts. Because circumstances can change every now and then, life can get in the way of your budget. So, budgets have to be flexible enough to make these allowances too.
To determine your budget, you will need to create an income and expense worksheet. This type of worksheet can be used to tailor a budget designed specifically for your situation.
Listing Your Income And Expenses
On you income and expense worksheet, you will need to write down all your sources of income. Income can include, in addition to your salary, items as dividends, rental income, interest, bonuses, alimony, or child support that you receive. Do not skip any. If you receive the income over the course of the month, you should include it. Don’t forget any routine money you make selling things on eBay, Craigslist, Half.com, etc.
Next, you will want to list all the expenses, such as your mortgage payment or rent, utilities, car loan payments, vehicle maintenance and gas expenses, credit card payments, student loans, childcare, taxes, investments, clothing, groceries, insurance, restaurant trips, charitable donations, medical costs, and any other routine costs that reoccur every month. You also need to take into account annual and semiannual costs such as property taxes, holiday and birthday gifts, home maintenance, etc. In the case of items that only occur every six months or so, you should take their historic costs and divide by the number of months in order to give you a monthly estimate for your budget.
Monthly Expense Worksheet
Many people do not like to compile this kind of list. If you are like me when I started budgeting, most people do not like to take a true look at how they spend their money. However, that is the whole idea and reasoning for compiling the list of income and expenses. It makes you see where you can improve with respect to spending and saving toward specific financial goals. Are you eating out too much at restaurants? Are you saving more for your children’s education instead of for your retirement? Your spending worksheet will help shed light on your spending so you can, in effect, know how to cut costs and save better. Making up a budget is not designed to scold you for inadvertently spending your money poorly. Its purpose is meant to help you make better decisions for allocating your funds every month.
Tracking What You Spend
By making an expense worksheet, you can see where your money is going every month so you know which expenses may be superfluous. An expense worksheet allows you to set up your monthly budget, and to do so you have to keep a careful record of all your expenditures. You need to track every last penny when you start in order to know where it all goes. When you use cash, for instance, make sure to carry a notebook with you and note the amount. Keep all of your receipts for your purchases. In the early stages of budgeting, you may find that you use the ATM machine much more often than is needed. Although the process can be time consuming, it can offer some revelations that may be quite surprising. Keeping track of cash expenditures can often show you that more of your money is being spent than is acceptable.
Some Of My Favorite Expense Worksheets
So, now we know that we need to track our expenses. But, where do we get a budget template or worksheet? Funny you should ask.
Here are some of my favorite budget worksheets to track your expenses…
Use an expense worksheet to create a budget that is tailor made just for you and your own financial situation. Keep track of your daily spending for about a month or two down to the very last penny. Use this information to create a savings and spending plan that is manageable. To create an income and expense worksheet will help you determine your monthly budget.