Creating a budget at home is simply a matter of jotting down a list of things you want or need to spend money on regularly, and deciding how much money has to be spent for each item in your list. Once you have that basic plan in place, then you need to keep a record of each purchase you make and bill you pay, so you can be sure you're not spending more money in any given area than you should, according to your budget.
Track the exact amount of money you spend with every purchase, and when paying each of your bills, for at least one month. If you have spending totals from previous months available on credit card statements or in your checkbook log, you can use these as the basis for starting your budget.
Combine the total spent from like purchases such as groceries and clothing, to create a monthly total for each.
Write a list of all areas in which you spent money, and include the total amount spent in each area. Combine additional like areas if possible, to create a general list of roughly 12 to 15 broad spending categories such as groceries, household expenses and entertainment.
Review and adjust your list as needed. Change category names if desired, and increase or decrease the amount of money shown for each area to ensure you have enough money assigned, but are not exceeding the total amount of your income.
Continue tracking your purchases and bill payments, using software or a paper-based checkbook system. As you enter purchases and payments, you'll be able to see when you've spent all of the money allocated to a given spending category. When you reach that spending cap, refrain from making purchases or payments in that category until the next month starts.
- DaveRamsey.com: Do Your Dollars Have Names?
- "The Total Money Makeover"; A Proven Plan for Financial Fitness; Dave Ramsey; 2007
- The Digerati Life: How to Make a Budget In 10 Easy Steps