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BUDGETING TUTORIAL

Figuring out how much money comes in is pretty easy, but figuring out how much you spend might take a little effort.

First, Collect All Your Bills

This includes your credit card statements, your check book register, and receipts for gas, groceries and anything else you buy with cash, check or a debit card.

Don't forget about items that are billed less regularly, such as taxes or insurance
If you don't keep receipts for some of the items listed you may have to wait a month or two while you collect the bills required

Use a notebook to make sure you record every receipt
Or use a money management program on a computer

Use This Budget Checklist

Mortgage or rent statement
Check book register
Car payment book or statement
Receipts for gas, groceries, childcare, etc
Utility bills (light, heat, water)
Insurance statements
Credit card bills
Savings passbook or statement

The Three Types of Expenses

Expenses can be divided into three categories:

Fixed
Variable
Flexible

Did You Know?

Not all budget items are equal:

Fixed budget items are the same each month (such as your mortgage)
Variable items change each month (like your phone bill)
Flexible items are often controlled by your willpower (such as whether you go to a movie on the weekend, and how much you spend there)

TIP

Saving adds up - Why save? For emergencies (most financial planners recommend you have at least six months' worth of living expenses set aside). Saving will also help you reach any special goals you may have but maybe never had the money to achieve - such as saving for the down payment for a new car or home

What Paying Yourself First Means

Almost every financial advisor recommends paying yourself first when creating a budget. What paying yourself first means is to:

Decide on an amount - say 5% or 10% - of your take-home pay
Deposit the money into a savings account
If your employer has an automatic savings deduction program, all the better - it's harder to spend what you can't see

By paying yourself first you get an orderly way to make your money grow - and that can really pay off in the long run!

Did You Know?

When you know what expenses are needed, versus what expenses are for wants, you'll be in great shape to make budget adjustments - as necessary - to help save for the car or home of your dreams.



Jump to:
1. Living Within Your Means	5. Shopping Within Your Budget
2. Budget Glossary	6. Research The Right Vehicle
3. Why Budgeting Works	7. Budgeting: A Review
4. How to Develop a Budget	8. Additional Information

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How to Create a Budget