Whether you make minimum wage or pull in over $100,000 a year, if you spend every penny you make you will always be broke. If you are tired of living paycheck to paycheck and worrying about running out of money, creating a personal budget can help you finally get a handle on your personal finances. Until you know where your money is going, you will never be able to cut back and save money effectively.
Carry a small notebook with you and use it to record everything you spend during the course of a day. Record every purchase, no matter how small. Write a brief description of the item and the cost. Also keep all your receipts, and use those receipts to make sure you have recorded all of your purchases.
Download a budget template if you have access to a spreadsheet software package like Excel. Using a template will make it easier to categorize your spending and assign each purchase to the right area.
Gather all your income information, including your pay stubs and paychecks. Also include any additional money you receive on a regular basis, including alimony payments, pensions and Social Security.
Record the total amount of your income in the budget spreadsheet template, or on the budget you create on your own. Total your spending for the month and divide it into the categories shown on the budget template. Make your categories as detailed as possible. For instance, instead of a single category for food, divide it into restaurant meals, takeout and grocery shopping. The more detail you include, the easier it will be to find those leaks in your budget.
Set a monetary goal for each category in your budget and compare that goal to what you are spending right now. Look for ways to cut your spending and get it down to your goal. Track your expenses month after month to see how you are doing and evaluate your progress.
Based in Pennsylvania, Bonnie Conrad has been working as a professional freelance writer since 2003. Her work can be seen on Credit Factor, Constant Content and a number of other websites. Conrad also works full-time as a computer technician and loves to write about a number of technician topics. She studied computer technology and business administration at Harrisburg Area Community College.