If you could count on your expenses being the same every month, drawing up a family budget would be easy. In practice, a number of expenses, such as your electric bill, rise and fall over the course of a year. Other costs -- haircuts, dental bills, auto repairs -- come at intervals or hit your wallet completely without warning. If you're making enough money to cover your bills for the year, budgeting for variable expenses is fairly simple.
Items you will need
- Records of past expenses
Go over your checkbook, your bills or your bank statement for the past year. Identify your variable payments and write down the amounts you paid on them each month.
Total the amounts in categories such as water, power, clothes, entertainment, and grocery shopping. Divide the total in each category by 12 to get the average monthly expense.
Whether you're using a notebook or a spreadsheet, write down the average monthly spending for each variable category, just as you do with your fixed expenses. Use the average when you figure out each month's budget. If the expense in any given month is less than average, don't touch the extra money. That way it's ready for the times the bills are above average.
Review your spending every month to see if everything conforms to your budget. You may find you're spending more on food or entertainment than you planned or that gas prices have gone up again. In that case, cut your spending or adjust your budget to take the changes into account.
- If you don't keep track of expenses -- you hit the ATM and do a lot of your spending in cash, for example -- start immediately. Keep receipts and record your spending for a few months, then average your variable expenses.
- If you have trouble tracking spending in different budget categories, try the envelope system. At the start of the month, place cash in a set of envelopes based on your budget: $90 for entertainment, $120 for gasoline, $200 for food and so on. Use that for your spending and carry over anything left in the envelope to the next month.
- If your expenses are consistently more than your income, you need to reduce your budget until that changes. Look to your variable expenses for places to cut costs, such as cheaper meals or fewer clothes purchases.
- Stockbyte/Stockbyte/Getty Images
- What Choices Do I Have After Taking Out a Bad Car Loan?
- Can I Refinance a Contract for Deed?
- Financing to Build a Home
- How to Become a Homeowner With Limited Income
- Do I Need to Write a Check for Earnest Money?
- Contract for Deed Vs. Lease to Own
- What Happens to the Excess Escrow Balance When Selling a House?
- How to Use an Annuity for a Down Payment
- How to Accept a Final Offer When Selling a Home
- How Much Down Payment on a Mortgage?