A survey conducted by MintLife found that 65 percent of those asked noted they don’t know how much they spent the previous month which leads us to these tips on How to Budget for a Month.
Many find it easier not to think about their finances, forgoing a budget altogether, which means they aren’t getting a full picture of their spending habits.
Possibly, they don’t want to know for fear of what they might find.
Without a budget, it’s just about impossible to get a handle on where your money is going and how it might be better spent.
It allows you to determine where you might cut back, making it stretch farther so that you can pay your bills, have some savings, and perhaps have a little left over to enjoy as well.
There are multiple different methods of budgeting, it’s simply a plan for your money so that you’re not left wondering where it went without any left for savings, forced to turn to payday loans in Canada (or wherever you happen to live) when an emergency arises.
Creating a budget for a month might seem overwhelming at first, but it can be done by taking it one step at a time.
Table of Contents
Determine Monthly Income
The first thing to do is to write down how much you earn every month after taxes and payroll deductions.
If your income is irregular, something common with those who work on commissions, freelance, or are self-employed, budget for your lowest monthly income or total all your income over the last year and divide it by 12 to get a monthly average, using that as a base mark.
If you have a good month, you can always make revisions, perhaps toss the extra into debt that needs to be paid off or into savings.
Add Up Monthly Fixed Expenses
Fixed expenses are expenses that you know will occur on a regular basis, such as your rent or mortgage, utilities, and car payment.
You might also include groceries. Basically, these expenses are the ones that are non-negotiable and can’t be cut.
Add Up Non-Monthly Costs
It’s also important to account for any irregular expenses.
Many people fail to do this, only thinking about them just before they come due, which can really throw off your budget.
They might include things like an annual insurance premium, vehicle registration fees, quarterly taxes, school tuition, and gifts for birthdays, holidays, etc.
Savings
How much are you contributing to savings?
Do you have an emergency fund, savings for retirement, etc.?
Every month, the payments that you make toward achieving savings goals will help you get closer to financial security so you can do the things that are most important to you while being able to retire comfortably in the future.
Paying Down Debt
If you have debt, you’ll want to figure out a plan to get it paid off as quickly as possible and calculate that into your budget as well.
If you’re paying a lot in interest, it might make sense to get that debt paid off before putting money into savings.
Other Spending
If you aren’t sure how much you’re spending on things that aren’t really necessary, such as dining out, online game purchases, etc., you’ll want to start keeping track.
Even small amounts can quickly derail the most well-designed budget.
Doing the Math
Subtract your fixed expenses, including the non-monthly costs, your savings, and debt payments from your monthly income.
What’s left is how much you have for any discretionary spending.
If you don’t have any left, it’s time to figure out where to cut back.
Creating the right budget requires a balance between being able to afford your current lifestyle while also saving for your future without having to live on Ramen and feel like you’re depriving yourself.
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