Putting together a monthly budget for yourself and your household is the first step towards taking control of your finances. It doesn't matter if you're trying to get out of debt, saving for a vacation or just want to stop from overspending. In any case, creating a monthly budget is extremely beneficial. Although it may seem trivial, it's important to take the necessary steps when writing down your monthly budget; otherwise you may leave something out.
List all sources of income that you expect for each month of the year. Make sure that you include months where you expect a bonus from your employer or monetary gifts for a special event in your life. Keep your list of income sources in one column in the event that another source comes into picture. This way, you'll be able to add the new source to the bottom of the list instead of rewriting the entire list.
List your expected expenses for each month of the year in another column. Include bi-annual, quarterly and annual expenses such as car insurance and life insurance as well as property tax or any additional expenses that may not come every month. Add a small amount as an expense for savings; this is to ensure that you treat your savings account as a bill every month and deposit money that you can afford setting aside for emergencies.
Categorize all of your household expenses (mortgage or rent and utilities) in one category followed by the transportation expenses (insurance, gas and maintenance) in another category. Other categories include recreational activities and health insurance; also list health expenses, such as prescription costs and co-payments for doctor's visits.
Label each item as variable or fixed. If an item is fixed, the amount stays the same every month or every payment and is usually something that is a necessity. Items that are variables can fluctuate between months and can be adjusted if you need to do so.
Calculate all of your income and expenses and compare the amounts in each category. If your expenses exceed your income, then it's time to take a look at your variable expenses and start deducting what you can. Remove or reduce the expense of any item or activity that isn't needed.
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