Create Your Monthly Budget with Ease – Money Pacers
Create Your Monthly Budget with Ease

Create Your Monthly Budget with Ease

Create a Monthly Budget with Ease

Budgeting (MP) Creating a monthly budget may not sound exciting, but it’s a vital factor in getting your financial house in order. Monthly budgets help you to decide how to spend your money, plan for your future, pay off existing debt, and save money each month by reducing wasteful and impulsive purchases.

Your budget will be composed of both fixed and variable expenses. Fixed expenses cost the same amount each month (mortgage, utilities, and insurance, etc.). Variable expenses tend to fluctuate, they represent those daily spending decisions like eating at a restaurant, buying clothes, and drinking cup of joe at Starbucks. a

The beauty of creating a monthly budget is that you can customize it to fit your own needs. Once you have determined what to put aside for your fixed expenses, you can alter the amount earmarked for variable items. The variable list provides you more wiggle room in how much you choose to spend and where, allowing you to prioritize as you see fit. For example, you might decide you can spend less on restaurants each month to save money toward buying that new Tablet.

Steps to creating a monthly budget

Bear in mind when creating your monthly budget try to provide as much detailed information as possible. Let’s begin.

1. Create a list of your entire income. If you’re self-employed or have any outside resources of income make sure to record these as well. If your income is in the form of a regular paycheck where taxes are automatically deducted then using the net income, or take home pay, amount is fine. Record this total income as a monthly amount.

2. Create a list of monthly expenses. Write down a list of all the expected expenses you intend to have over the course of a month. This includes a mortgage payment, car payments, car insurance, groceries, utilities, entertainment, developed photos, auto insurance, retirement or college savings and essentially all the things you spend money on.

3. Break expenses into two categories: Fixed and variable (extras)… When you begin setting up your monthly budget, start with fixed categories (mortgage, rent, utilities, etc.) before breaking your budget down into smaller variable expense categories.

4. Take a look at these lists to find flexible budget expenses where you are able to reduce spending. Place a star or check mark next to those flexible expenses so you can identify them with ease.

5. Estimate what you spend. Search your checkbook and any other receipts or records you’ve kept within the last couple of months so you can track how much you actually spend on both fixed and variable expenses.

6. Add up your Fixed and variable budget essentials list separately. By keeping the lists separate, you’ll make cuts smoothly.

7. Total your monthly income and monthly expenses. Then subtract the expenses. When your end result shows more income than expenses you’re pacing your money. This means you can prioritize this excess cash to areas of your budget such as retirement savings or paying more on credit cards to drop that debt faster. For anybody who is showing a higher expense column than income it means some changes will have to be made.

8. If your variables list produces negative numbers, start looking for areas to cut. Make sure to trim from your variable (extras) list to put more money toward debt reduction if you’re in debt.

9. Find ways to boost your income. Do you have a hobby or a talent? Just about anything from handy work to writing or tutoring can be a way to earn extra money. One great advantage of this strategy is that you can make your side business full-time if you ever lose your job.

10. Review your budget monthly. It is recommended to review your budget routinely to ensure that you are staying on track. After the first month take a minute to sit down and compare the actual expenses versus whatever you created in the budget. This will show you where you did well and where you may have to improve.


Fixed and Variable Spreadsheet

Don Briscoe
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Don Briscoe

Finance educator, advisor, and leading voice in the global financial literacy movement.Founder and editor of lives and enjoys life with his family in New York.
Don Briscoe
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