What to Include in a Personal Budget

BusinessDictionary states that a budget is "one of the most important administrative tools." That's because a budget takes a person's income and puts every bit of the money to work for the individual or family using it. Those who budget not only benefit by not overspending but also by having a detailed action plan that helps them meet their current goals while also working toward future goals. When creating a personal budget, it's important to know what information to include.

Every budget begins with a person's total monthly income after taxes. Salaried workers and those receiving regular paychecks can quickly tally how much they earn in a 30-day period. Anyone with irregular income will need to add up three months of income and then divide that figure by three to get an average. Those who are self-employed can use their previous year's tax form and divide the total yearly income by 12 to get a monthly figure with which to work.

The next step in creating a budget is to list categories that cover all of your expenses. Start with regular expenses that you always have. For example, the housing category should include your mortgage or rent payments, utilities, homeowners insurance and any other expenses associated with the upkeep of your home. The food category should encompass all of the groceries for your meals and also anything you'd pick up at the store, such as shampoo, deodorant and toilet paper. Other regular expenses include transportation, clothing, entertainment and medical.

You may also have a few variable expenses, but you'll still want to plan for these in your budget. For example, you may be planning a family vacation to Disney World in the first half of the year and then a simple camping trip in the second half. A few other variable expenses to consider include property taxes that may be due every quarter, birthday and holiday gifts you'd like to give, debt that needs to be paid back and vet bills. It is best if you can save for variable expenses in advance.

Savings is an important part of every working budget. Not only will you need to accrue an emergency fund that has enough money to cover at least three to six months' worth of bills, but you'll also need to save for things like retirement and your child's college education. Most experts recommend saving or "paying yourself" 10 percent each month.

There are several options when it comes to recording your monthly budget. You can print a free worksheet from either Consumer.gov or Mint.com and write the budget out by hand, or you can utilize a personal finance software program like Quicken. You can also download a budgeting app to your tablet or smartphone. Moneydance, You Need a Budget and SplashMoney are all excellent apps that will help you meet your financial goals.