# Figuring a Monthly Budget

Figuring out your monthly budget may not seem like the most fun use of your time, but the rewards more than make up for the effort you put in. Planning a budget and sticking with it can prevent you from making snap purchase decisions, such as those boots that look great but are impossible to walk in. A budget will also help you meet your financial goals, whether they are saving for a new house, car, a vacation or retirement.

## Step 1

Add up the total monthly income you and your partner earn. Look at your pay stubs to figure out the income for the month. If you earn \$2,400 before tax biweekly, multiply that number by 26, then divide by 12 to determine your monthly income. If you earn \$1,000 per week, multiply that number by 52, then divide by 12 for your monthly income. Also add any income earned from interest, bonuses, overtime or commission to your monthly amount.

## Step 2

Figure out your average monthly expenses. There are several ways to do this. Collect every receipt for every purchase for a month as well as your utility bills, mortgage or rent receipts and car payment information. At the end of the month, sit down and total up the receipts and bills.

## Step 3

Find the monthly cost of any quarterly or semi-annual expenses, such as car insurance payments. Divide an amount due twice a year by six or an amount due four times a year by three. Add this amount to your monthly expenses.

## Step 4

Compare your monthly income to your monthly expenses. You want the total income to be bigger than the total expenses, but it may not be. If you have more expenses than income, go back over your receipts and determine what you can cut back on. For instance, try trimming the amount you spend out at restaurants by 10 percent or reducing your clothing expenses by 10 or 20 percent.

## Step 5

Make a list of expense categories and the amount you can spend in each category monthly. Typical categories include housing cost, car payments, insurance, taxes, groceries, savings and fun money. Record the categories and the amounts on a spreadsheet or in a notebook.

## Step 6

Keep on track by recording your expenses each month, so that you know when you are about to go over budget in certain categories.

## Step 7

Revisit your monthly budget and make adjustments every year or every six months. You should also adjust your budget whenever something changes in your financial world, such as when either of you earns a raise or when you pay off your car.