In difficult economic times building a budget is even more critical. Individuals need to understand where their money is going and how much is coming in. This is the first step in building strong personal income, protecting individuals from dangerous spending.
Things You Will NeedA list of expenses and income.
Step 1Sit down and do an honest development of expenses. Start with the mortgage, car payment and the set monthly bills. After that create a detailed listing of estimated monthly expenses, such as food and gas. Make sure the estimates are true and honest.
Step 2After figuring out the total expenses, move on to the income. List all income on the right side of the paper, next to the expenses. Make sure all income is after taxes and other deductions, otherwise the outcome will be flawed.
Step 3If the income is higher than the expenses, than congrats. However, if after every bill is payed and there is nothing left for savings something is wrong. Take another look at general spending and adjust fittingly. If the expenses are larger than income, start cutting back and get the columns balanced again.
Step 4When the budget is created by balancing the two columns, make a list of what can and cannot be spent monthly. Print the list and post in an area where each family can see it. Make sure everyone is on board and do it.
Step 5Give the budget a few months before adjusting the budget. Any budget needs a large sample, so avoid trashing it too early. If it works right away, continue keeping track and adjust for any increase or decrease in income.
Budgets can work, it just takes some work and time.