Making a Budget

Do you want to learn how to make a budget? It's sure to be easier than you may have thought. One thing is sure: You need more money coming in than going out. Any truly wealthy person knows that aspect has to come first and foremost.

First, you need to write out two lists, one of your total income and the second list is your total expenses. Your first list will include your monthly income, regardless of the sources. Add up the numbers and you will have your total income, which may include areas besides your career income, including child support, part-time business income, rent paid to you, etc. Secondly, write down a list of all the outgoing monthly expenses, such as car payments/maintenance/gas, house payments/rent, various insurances, food, clothing, utilities, taxes and childcare.

This list getting done is your goal for the first whole month. You must keep records/receipts of all the spending, where it was spent and on what. So, naturally you do the same for any and all incoming monies for the month. This gives you a great black and white picture of your financial habits. You will probably be more than surprised, and maybe shocked, at how much more seems to be slipping out rather than coming in.

The first 60 percent of your gross monthly incoming monies includes all the necessary expenses you need to live. The remaining 40 percent gets divided into four equal increments of 10 percent each. Those categories are retirement, short-term savings, entertainment and an emergency fund.

If there is not enough money by the end of the month, then you must decide what to cut back on or quit buying. Most cutbacks are focused on the rent/house payment and/or vehicle expenses.

Budgeting can be fun because when it comes to the end of the month, you can see that you have a non-guilty amount of money to spend on clothes and fun!