It is a good practice to have a monthly budget and to know exactly how much you earn and how much you are spending on monthly costs. First figure out how much you earn each month. If you get paid weekly or bi-weekly add up how much you make from each paycheck for one full month. Now make a list of everything you spend money on. List things that do not change first, these are things that are fixed costs like a mortgage or rent, car payment or insurance, possibly your electric bill or other bill that may be at a set rate monthly. Here’s an example of possible things you could list that need to be paid monthly:
• Mortgage/Rent
• Car payment(s)
• Car insurance
• Electricity/Heating
• Water/Trash
• Telephone (home & cell phone)
• Internet Service
• Cable/Television
• Any medical bills and/or prescription costs
• College loans or any kind of loan you are paying
• Credit card(s) payments
• Other insurance you may have (like life insurance)
Other Expenses to take into account:
• Groceries/food
• Eating outside of home (going out for dinner or lunch)
• Gas for car
• Clothing purchases
• Health/general products purchases (shampoo, drug products, toilet paper, etc)
• Pet expenses (food, litter for cats, toys, routine shots, vet visits)
• Gift purchases (birthdays and holidays)
• Entertainment expenses (going to movie theater, bowling, any kind of entertainment purchases)
• Repair expenses (if something breaks)
• Money to put into savings, emergency account or any kind of fund (like for college savings, vacation or Christmas fund)
• Baby expenses (diapers, food, etc)
• Home improvement expenses
• Anything else you regularly spend money on (magazine subscription, Newspaper, any other kind of subscription, like NetFlix)
Once you have the exact price of the things you pay for each month that do not change, estimate how much you think you spend on the other expenses to take into account. List anything you spend money on. Now, watch your spending habits over the next month. Write down every single thing you spend money on, go online to check your account if you have the ability to do such and look at the record of what you’re spending money on and how much you spend on needs vs. wants.
Figure out what your weaknesses are and once you know what it is try to get better about those kinds of purchases. Many people have weaknesses when it comes to shopping for clothing or many other various kinds of things. Lots of people eat out too much or spend too much on entertainment when they don’t have to. A lot of people like buy lunch everyday rather than bring their lunch to work. Look at how you spend money and see if there’s anywhere you can cut back or cut out completely. You might be surprised. Some people do live on a bare bones budget and may be spending every single dollar on something they need, rather than on things they want or would like to have. However, many people find there are areas where they can cut back after they track their spending habits for a month.
There are lots of free tools on the internet to help you along the way:
Big List of Free Budgeting Tools from My Money Blog
10 Online Budget Tools from Dough Roller
Mint.com: The Best Free Way to Manage Your Money
Free Household Budget Worksheet from Bank Rate
