Setting Up a Budget Plan

Having a budget helps prevent overspending.

Having a budget helps prevent overspending.

Setting up a budget plan for your home is an important task when it comes to staying out of debt, getting out of debt, saving and not overspending. If you already had a budget set up for yourself and are moving in with your partner, you should reevaluate the budget to include the two of you. Moving in with someone can tempt you to splurge since you are probably splitting the mortgage or rent, but having a budget to follow helps to keep you within reason.

Pull all of your financial information including the money you have in your bank account, your bank statements, recent utility bills, investment information and any other financial information that documents your income and expenses. Prepare a worksheet that has all of your income listed in one column and all of your expenses listed in another; the difference is your net worth. Ensure that these lists are itemized so that later on you know exactly what you need to cut out. Make sure to list any items that are expected as well; this ensures that you have everything you need written down.

Separate the items on your expense list that are fixed from the items that are variables. The items that are fixed are needed expenses that usually stay around the same amount each month. These include your car payments, mortgage or rent, credit card payments and other utility bills. Variable expenses fluctuate each month and some can be done without. These variable expenses include groceries, gifts, eating out and entertainment.

Calculate each column and determine whether your income exceeds your expenses and vice versa. If the income is more than your expenses, this is a good sign. If the expense column is more than the income column, adjustments need to be made to reduce costs. Look at the variable column first to determine what you can go without and what can be reduced. This should bring you closer to your income level if not below that amount.

Review your budget every month and make note of any changes to your income and any adjustments to your expenses. It is important to stay on track with reviewing your budget on a regular basis so that you can stick with your goal of saving money or paying off debt. After a couple of months of reviewing your budget, you can determine what areas need improvement and whether you need to make any additional adjustments to ensure that you are where you need to be.

Items you will need

  • Pen
  • Paper
  • Calculator
  • Bills
 

About the Author

Akeia Dixon is a freelance writer who began her professional writing career in 2009 for various websites. She enjoys writing about natural health topics but also loves to research and write about her findings on any subject. She is currently in school studying psychology and sociology.

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