Prepare a Budget
Simple Budget Preparation
Here are some simple budget spreadsheets that you can download and begin to analyze your income and expenses. The budgets with projection are useful to revise your budget figures once you have entered the original information:
Calculate your Monthly Net Income
Begin with income by including every after tax dollar you make in a month, avoid overestimating your income, it’s better to have money left over than be caught not being able to pay your bills.
Calculate your Monthly Expenses
Include all of your monthly expenses. If necessary use the figures from your notes to help you with accuracy. Do not forget those expenses that come up once in a while, they may be quarterly or annually. Also include other infrequent expenses such as gifts, weekend trips and vehicle maintenance costs.
Income less expenses
The budget sheets will total your expenses and subtract the sum from your income. If you find there is a large amount of surplus income , but in reality you are finding it hard to make ends meet, then you have not accounted for everything or some of your figures are wrong. Examine your budget for inaccuracies and make corrections.
Don’t forget debt
If you have credit card balances or any other short-term debt, include those payments into your budget as well. Figure out the amount you can realistically pay each month, and commit to never going under that amount. Since interest rates for this type of debt are often very high, it makes sense to pay it off as quickly as possible.
Identify where you want to make changes
Once you have an accurate idea of where all of your money is going today, it is time to make changes for the future – particularly if there is more going out then is coming in. Your options include increasing your income, decreasing your expenses, or a combination of the two.
Include savings goals
Enter the amount you have calculated you need to meet your financial goals, using the figures you developed from the Financial Goals Chart. They are now an expense and you will “pay yourself” as you would any other important bill.