Let’s take ten minutes and create your new budget for December.
Write down your expected monthly income. (Use your take-home pay.)
Write down your expected monthly expenses.
Include everything – gasoline, groceries, rent, mortgage, insurance, food, clothing, gifts, miscellaneous, cell phones, credit card payments, etc. Need help? Look over your bank statements from the past couple of months. These should help you compile a pretty accurate list.
Subtract expenses from income. Did you get a positive number? Good! This is the amount that you can budget for extra savings or extra debt reduction payments. Did you get a negative number? Not so good! This is the amount that you need to earn (in the form of more income) or reduce (in the form of cutting expenses)
Creating a budget takes about ten minutes. Learning to live on a budget takes a little longer. If you are struggling, now is the time to sit down and take stock of your financial situation. When I created my first budget, I immediately realized two things –
I was spending a lot of money on things I did not need AND I was making enough money, if I managed it wisely, to begin to reduce my debts.
I have written several articles about creating a budget, including –
Creating A Budget If You Have Irregular Income (Do you live on commission? This budget is for you!)
I Pay Myself First, Last, And All Along The Way (Here’s how budgeting helps me save month, at the beginning, end, and middle of each month.)
Annual Expenses – (Here’s how to handle annual expenses, things like life insurance premiums or car tags.)
After you get into the swing of things, living on a budget becomes second nature. For 2009, I plan to create one budget, have it set up by January 1st, and use it for an entire year. I can do this because I have worked hard to fine tune my budget for almost four years. Starting out, you will want to focus on one or two months at a time.
Personally, I use the You Need A Budget software to manage my finances. I’ve been using it for more than two years, and I highly recommend it.
Remember, you can write down all of the numbers you want, but you must FOLLOW THROUGH WITH YOUR PLAN. You budget has to mean something. You can’t just write down a bunch of numbers and then ignore them. Treat your budget with respect, and stick to it, and you will save money.
Click here to read the Top 10 Ways To Save Money.
this is a really a great idea but i guess more people these days just don’t want to see reality in the face, such as the negative balance, meaning spending beyond the means, which is mainly because of impulsive buying.
its about time we sit down and do reality check to improve our finances..Thanks!
Great article with lots of valid points. I’ve been writing about creating a budget and a balance sheet too.
So many people are in difficulties because they do not have a balance sheet, they don’t realise that they’re forever spending more than they earn. This time of year also gets a lot of people into trouble – people feel they have to spend alot on gifts, food and entertainment. I just wish that we could get back to the true meaning of Christmas, spend less and still have an enjoyable time with our families. January is a miserable time when you have overspent at Christmas!
Budgeting is a thing lots of people talk about, but few actually do. When I finally wrote one down for myself, I was mostly shocked by the amount of money I spend on silly things, even though I thought I was very frugal.
I tend to agree with Nick. Budgeting is highly overrated. How may people actually take the time to do it? I try to flip everything on its head and just see how much money I can AVOID spending. If you don’t think about how much you have to spend and simply try to save every penny, you never have to budget.