Creating a Budget

 

A budget is one of the easiest ways to track where your money goes.  

 

The three basic categories that are within your budget are your income, or your money coming in, your necessary expenses*, such as house payments or bills, and your discretionary expenses*, such as going to the movies, or eating out.  

  *(think of your necessary expenses as your needs, and your discretionary expenses as your wants)  

 

The first step to creating a budget is to identify your necesssary expenses.  Outline them, and how much you spend on each.  Second, subtract the amount you spend on necessary expenses from your income to see how much you have available to spend as you wish.  This amount you have left can be used for discretionary spending or can be put into your bank account for later.  Often people choose a balance between them-this is up to you.  Reccomended amounts to save range from 6% of your income to $15-20 per dollar you spend on necessary expenses to 10-15% of your income.   

Tips

• One of the most important things about your budget is not to forget about it. Make sure you keep up with it every month, mostly because bills can fluctate in value, as can your income. 

• ​If you have trouble with following your budget, sometimes withdrawing a fixed amount of cash at the beginning of the week will literally stop you from spending more.  

• Finally, make sure you aren't spending more than what you alott. It's pretty self-explanatory, but it is still important. Debt is a serious topic, which is discussed on another page.