Making a monthly budget worksheet can help you avoid financial difficulty and keep you on the path toward financial health. It lets you see at a glance how much money you are spending on essentials like food and housing, how much you are saving for emergencies and special family vacations and where you can easily cut back to save more. Once the worksheet is set up, it is a simple matter to keep it up-to-date.
Calculate your monthly income. This includes income from your job and your spouse's, any rental income and any income from investments you may have. If there are wide fluctuations in your income, average your income over the course of a year. The average income is what you use for budget purposes.
Next, gather all your monthly and regularly recurring bills and decide on an expense budget. Fixed expenses include mortgage or rent, phone, car loans or leases, insurance, credit card payments and gym memberships. Your utility bills may fluctuate a lot from winter to spring; if so, use a three-month average for these months. Include trips to the ATM machine and track what you spend that cash on for a month's time so you know where all your money goes. You may be surprised at how much of this money is really discretionary — money you do not need to spend. Once you know what you are spending money on, decide on a budget based on your historical expense data.
Decide how much you want to save or invest each month. Most financial experts agree you should have at least three month's worth of income set up in an emergency savings account to help pay expenses should you get sick or disabled. Also, plan how much you want to save for your retirement, college education for your children or a family vacation. By examining your expenses and where you can cut back, you will be able to save more.
Set up your budget on a spreadsheet. Use 13 columns across the top for each month of the year plus one column for an annual total. The rows on the left side of the sheet are for each expense and savings category such as utilities and contributions to savings accounts. Next to each savings and expense category, put down the amount you are budgeting. Each month when you sit down to pay bills, fill in your worksheet with the amount you saved or spent. Highlight those areas where you are either over or under budget so you can see how close to budget your expenses and savings are.
Review your budget worksheet each time you pay bills with an eye toward how you can cut expenses and increase savings. Make sure you talk with your spouse about how well you are doing with your budget plan and involve your children in the process as well. The earlier children learn about how to handle money, the better. They will be better financial managers as adults.
Reward yourself! If you have done a good job of budgeting your expenses and savings, take your spouse to a nice restaurant or concert and celebrate. This can become an important family tradition, just like celebrating birthdays and anniversaries.
- Using a spreadsheet software program makes it easy to enter data and correct mistakes.
- Check online for free budgeting software.
- Keep up with your monthly budget worksheet. It will pay off in the long run as you see where you can economize, save and manage your expenses.
Lisa Nielsen is a marketing consultant for small businesses and start-ups. As part of her consultancy, she writes advertising copy, newsletters, speeches, website content and marketing collateral for small and medium-sized businesses. She has been writing for more than 20 years. She is also a business strategist, trainer and executive coach. Nielsen holds a Master of Business Administration from the University of Miami.