Writing a Personal Budget

A personal budget is a plan to avoid overspending.

A personal budget is a plan to avoid overspending.

Writing a personal budget is a process of determining how much money you have available on a regular basis, and deciding the best things to spend it on. By creating a specific plan that shows how much money you'll spend in a given area of your budget, and sticking to that spending plan, you can free up funds to use for other expenses or bills.

Write down the total amount of money you earn from all sources each month. For budgeting purposes, only write down funds you actually received (take-home pay), because that's all you're able to actually spend.

Subtract each major household and personal bill you have, listing the name and amount of each individually. Create estimates for any bills you don't have a specific total for. According to New Mexico State University, American households generally spend an average of 30 to 35 percent of their take-home pay for household expenses such as rent, utilities and furnishings. If in doubt, try starting with those percentages for your first budget.

Subtract remaining necessary expenses, such as groceries. List each item by name, and assign a dollar total estimate for how much you normally spend on that item each month. While household spending priorities vary, if you're not sure how much to budget, you can begin with averages. Americans spend 15 to 20 percent of their income on food, and 17 to 19 percent on transportation.

List and subtract additional non-essential items that you want to spend money on each month, such as clothing and entertainment. Clothing averages three to seven percent of take-home pay across the country, while entertainment averages five to six.

Distribute any remaining funds to spending areas that are underfunded, or assign them to an extra savings category. Use surplus savings for special events and purchases, or to cover emergencies.


  • When paying bills and making purchases, note the relevant budget category for each. At the end of the month, review how much you spent in each area to determine whether you're on track with your budgeting goals.
  • A variety of computer and Internet programs exist that can help with setting up and managing a budget as well. Most cost money to use, but some, such as Mint.com or Mvelopes, offer a free trial.

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About the Author

Kathy Burns-Millyard has been a professional writer since 1997. Originally specializing in business, technology, environment and health topics, Burns now focuses on home, garden and hobby interest articles. Her garden work has appeared on GardenGuides.com and other publications. She enjoys practicing Permaculture in her home garden near Tucson, Ariz.

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