Everyone from financial expert Suze Orman to "Start Over, Finish Rich" author David Bach recommends establishing a personal financial budget. You can use a budget to guide your spending and savings, as well as gain insight into your financial habits and expectations. In addition, creating a personal budget can support you slowly and steadily work toward financial goals such as paying down debt, saving for a down payment on real estate or taking a trip around the world.
Choose the type of personal budget worksheet that suits your needs. Some people like a piece of paper divided into columns for income and expenses. Others prefer a spreadsheet with categories. If you want an interactive budget worksheet, try the free online personal budget worksheets available at Mint.com, which allow you to graph trends and set goals.
Divide your budget worksheet into income and expenses. You need a clear distinction between what you take in and what you spend, as these totals will guide the monetary decisions and goals that you make.
Start with the fun part and total your income. Use your monthly net pay, unless you would rather have a more detailed budget divided by weeks. If your pay varies dramatically, you can enter your average monthly income, create budgets for two different financial scenarios or show a range of figures. Include all types of income, including interest on savings, bonuses, gifts and dividends on investments.
Itemize your expenses. Consult your bills and financial records to ensure you include the regular bills such as mortgage or rent, utilities, car payments, educational expenses, groceries, toiletries, cleaning supplies, transportation, medical expenses, television, internet, debt payments and insurance premiums. Other typical categories include clothing, gifts, charitable contributions, entertainment, home repairs, car repairs and vacations.
Total your columns. You should have enough money left over to allocate a dedicated amount toward paying down high-interest debt, establishing an emergency account, saving money toward long-term goals and contributing to a retirement plan.
Figure out your "latte factor," a term developed by financial author David Bach. If you come up short of savings goals, track your spending by writing down daily expenses in a notebook. You may find that your daily latte costs you some serious savings. For others, their "latte factors" are buying too much fast food, impulse retail purchases or excessive spending on personal care.
Nina Makofsky has been a professional writer for more than 20 years. She specializes in art, pop culture, education, travel and theater. She currently serves as a Mexican correspondent for "Aishti Magazine," covering everything from folk art to urban trends. She holds a Bachelor of Arts in English from Mills College.