Budgeting Part 2 – Recording your Income and Expenses

Thursday, October 23, 2008

Now that you have gathered as much of your income and expenses you could find, its time to start your basic budget.

  1. Decide if you are going to keep a paper account or computer account of your income and expenses. I chose to keep track on a computer spreadsheet. Many spreadsheet programs provide templates for budgets. If you do not desire to develop your own, search the Internet, find one you like, and then tailor it to your needs.
  2. Record your income and expenses that you were able to gather from Part 1: Gather and Organize.
  3. Prorate quarterly and yearly expenses. Utility bills can fluctuate from summer to winter. Decide how you are going to manage the fluctuations. I chose to use my highest monthly bill as my base. At the end of the month the surplus is deposited into to savings for an unexpected event or a special treat.
  4. Review your budget - Does your Budget Balance? You should always make more than you spend.

Remember you are still in the beginning stages of managing your budget now you need to see if it works.

Additional Tips:

  1. Record your receipts into categories on your spreadsheet as you go. This helps you determine where you are overspending (if you are) before the end of the month.
  2. If you were not able to determine a base budget for a specific item it is okay to estimate.
  3. During this time don’t change your basic spending habits unless you are spending more than you make.
  4. Try not to make any major purchases, as doing so will give you a less accurate estimate.
  5. Common categories include food, gas, clothing, daycare, and utilities.
  6. Decide whether each expense is a need or a want.