How to Budget Paychecks

Knowing how to budget your paycheck will help you stay financially fit.
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Sticking to a household budget is an essential function of being financially stable. The security of a budget allows you to know how your income is spent on both the necessary and extra items in life. You can budget your paychecks to allow for spending in areas such as routine expenses, savings and even luxuries.

Step 1

Determine your income. Add together your paychecks by using pay stubs so that you are only using the net, take-home figure for your calculations. Make sure to take into account the frequency of your pay. Calculate your annual take-home income by multiplying your paycheck take-home figure by the number of times in a calender year you are paid.

Step 2

Make a list of all monthly and routine expenses. Include payments made for rent or mortgage, utilities, vehicles, insurance premiums, credit cards, loans, routine medications and other expenses you incur regularly. For expenses that change every month -- such as utilities -- add together 12 months of payments and divide by 12 to determine the average figure. Add together all figures to determine monthly output.

Step 3

Divide your monthly expenses by the number of paychecks you receive per month. Earmark that figure for each paycheck. This will give you a baseline figure to use in your budget. For example, if you bring home $2,000 per month between two paychecks and your monthly expenses total $1,000, you will need to reserve $500 per paycheck to pay for your expenses.

Step 4

Make adjustments to your budget as necessary. Understand the due dates for all bills and organize finances accordingly. Make sure you hold back enough money from every paycheck to afford all bills for the month.

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