When you learn how to budget yourself, it can help reduce any outstanding debt that you may have, and it also means that you are taking a big step towards solidifying your financial future. Typically, making a budget will help you make sound financial decisions. You may even be able to save some some extra money for the future or go on your dream vacation.
Track Income And ExpensesTo begin your budget, you will need to analyze how you have been spending money. It will probably help you analyze your income and expense streams by using some type of personal finance software. There are both free and paid versions available such as the following:
- Microsoft Money
- Atidium Using this type of software isn’t mandatory. However, there can be advantages as some applications will automatically sync with your bank or credit card account and download your financial data. If you choose not to use this method, you can also set up a great budget by utilizing a spreadsheet application like Microsoft Excel or Google Sheets.
Creating Your SpreadsheetIt will be easier to track your expenses and income when you categorize them. This way you can clearly identify each area. Begin by following these steps if you are using a spreadsheet:
- Start at cell B1 and label each cell in the first row with the 12 calendar months.
- In column A, skip down three cells and label the cell “Income.”
- List your fixed sources of income in column A — Child-Support, Wages, Pension, Life insurance payment.
- Skip down a cell in column A and label the next cell “Expenses.”
- List your major fixed expenses — Utilities, Mortgage, Rent, Food, “necessary” Clothing and Household Items.
- List your discretionary expenses — Entertainment, Savings, Recreation, Vacation, etc.