Creating a detailed budget involves paying very close attention to how you’re using your money currently, then making decisions about where it really needs to go. By getting specific about your spending each month, you erase any question about how to spend your money wisely. Detailed budgets are the answer for those who need strict guidelines to make good decisions about their finances.
Keep a detailed journal of everything you spend money on each day for a week. For most people, this is harder than it appears, especially since many people have fallen out of the habit of balancing their checkbooks. To create a detailed budget, you need to understand where your money is going first, which means jotting down even the smallest of expenses.
Summarize your spending habits by creating categories fat the end of the week. Decide how detailed you want to get with your category creation. Categories may include groceries, entertainment, transportation and bills. You could get more detailed by breaking those categories down. For example, entertainment could be further broken down into eating out, movies/live performances and sports/recreational activities.
List all of the bills you pay each month, including utilities, credit card and loan payments, cell phone bills and rent/mortgage payments. Use your weeklong journal to project your spending for a month. Add the cumulative total to your recurring bills to the monthly projection for a close estimate to your monthly spending.
Compare your spending with your income. If your spending is coming within an uncomfortably close proximity of your income, look at where you can cut back or consider how you can generate more money. Just because your budget is detailed doesn’t mean that you have to stop enjoying using your money altogether. Be specific about instituting small money-saving changes, like bringing your coffee to work three days a week rather than buying it at a cafe, or swapping books instead of buying them new. Just as small purchases snowball, small savings accumulate quickly as well.
- Although it’s good to be detailed about your budget, you should allow yourself some flexibility from month to month to stay motivated and on track.
Joy Uyeno has been writing about travel, food, fashion, culture and finance since 2005. For three years she wrote a column for the "Honolulu Star-Bulletin" aimed at young and first-time travelers. Her writing has appeared in several local and national publications, including the 2008 anthology "Honolulu Stories." She holds a Master of Arts in writing and publishing from Emerson College.