Budgets and budgeting

Budgets and budgeting does not have to be a mysterious or intimidating thing

In 5 easy steps, you can build a budget and start putting your financial affairs in order.

  1. Take a small notebook with you wherever you go. The reason for this will become apparent. Get into the habit of getting a receipt for everything you can. When you can’t get a receipt put it in your notebook. This includes everything, even a piece of bubble gum. Do this for a minimum of 30 days. Longer would be better, 2 or 3 months will give you a true look at your spending patterns.
  2. After completing step 1 look closely at your recorded data. Make up categories for all of your purchases. i.e.: mortgage/rent, food, clothing, etc. Differentiate Fixed Expenses and Variable Expenses. Fixed expenses are those that do not change i.e.: house/rent payment, insurance, cable, etc. Variable expenses are those that vary depending on you or conditions, these are the ones where you have the greatest degree of control, they would include groceries, entertainment, phone, heat, lights, etc.
  3. Add up all the expenses in each category.
  4. Add up your income for the month. Add up all of the fixed expenses. Subtract the fixed expenses from the income. The result is what you have for variable expenses.
  5. The leftover monies can now be spread over the variable expense categories. You now have a budget.

The example budget below shows how a simple budget can be constructed.  You can make your budget more detailed by breaking down the categories even more. To get the weekly amount, multiply the monthly amount by 12 and divide the result by 52.

Item: Paid To: Monthly Amount: Wk.Budget:
House/Rent Pmt. First Mortgage Bank $525.00 $121.15
House Insurance Fire & Casualty $20.83 $4.80
Electricity Energy Supply Co. $ Variable $ Variable
Heat/Gas Gas Supply Co. $ Variable $ Variable
Water & Sewer City Water Works $ Variable $ Variable
Cable State Cable Company $45.00 $10.39
Trash Removal Landfill Collectors Co. $35.00 $8.08
Phone Sprint $ Variable $ Variable
Maint. & Repairs ———— $ Variable $ Variable
Groceries Grocery Store $ Variable $ Variable
Entertainment ————- $ Variable $ Variable
Gifts ————– $ Variable $ Variable
Meals Eaten Out Restaurant $ Variable $ Variable
Car Payment Auto Finance Inc. $425.00 $98.08
Car Insurance Auto Insurance Co. $39.17 $9.04
Car – Fuel Gas Station $ Variable $ Variable
Car – Maint. Auto Service $ Variable $ Variable
Car – Plates Auto License Branch $13.33 $3.08
Club Dues Tennis Club $18.75 $4.33
Magazine Subs Mag. Sub. Service $4.17 $.97
Health Care Dr. Visits $ Variable> $ Variable
Personal Items ————– $ Variable $ Variable
Savings Mutual Fund $50.00 $11.54
Miscellaneous ————– $ Variable $ Variable
Emergency Fund ————– $ Variable $ Variable
TOTAL N/A $ Unknown $ Unknown

There are software tools to help you construct a budget. One such tool is Family Funds Tracker. You can do it the hard way by putting every purchase and payment made on paper then add it all up and average it out, or you can use an information collection tool such as Family Funds Tracker Std. and Family Funds Tracker Pro.The most important factors that are going to decide the success or failure of your budget is your determination and willpower. You can have the best tools available for constructing your budget but if you lack the important factors you are going to be disappointed with your results.