How to Create a Budget: Do You Need a Budget?

Today's economy has more and more people scrutinizing their income and expenses. Many consumers are trying to keep up with every penny. To do this effectively you need a budget. A budget will allow you to place a limit on the amount of money you spend on a monthly basis, for a number of different categories, such as travel, entertainment, and miscellaneous items, just to name a few. A personal budget is a mechanism that helps you control and be more responsible for your spending.

Taking the time to put a budget together will pay off in the long run. This tool helps you to remain focused and disciplined when it comes to saving, spending, investing, and building wealth. Following a budget is like a road map or blue print designed to help you achieve financial success. It's always a good idea to adjust and amend your budget especially when your circumstances change.

If you have ever had a budget then you know it kept you from making unnecessary purchases. A personal budget is especially useful during tough economic challenging times. Budgeting helps you manage a limited amount of money for everyday expenses.

So how do you begin to put a personal budget together? The first step is to find out what sources of income are available to you on a monthly basis. You may receive income from a paycheck, interest income, child support, or social security. Make sure you use reliable sources of income. If you have a budget worksheet this process will be a lost easier for you. (See below). Always use net figures or the amount of income you receive after taxes and expenses have been taken out. Insert all sources of income into the appropriate categories within the budget worksheet. The worksheet will add them for you automatically.

The next thing to do is fill in your monthly fixed expenses. Some items to insert include your mortgage, rent, auto payment, internet payment, phone bill, utilities, just to name a few. Review this section of the budget worksheet thoroughly to make sure nothing is omitted.

In the next section list all of your monthly variable expenses. These expenses will usually change from month to month. Some of things you can list here are groceries, lunches, credit card payments, gasoline, public transportation, baby expenses, as well as clothing and laundry expenses. There are a number of expenses you can list in this section.

The next section to complete is entertainment. Some of the items you list here are cable, movies, theatre, sporting events, concerts, and amusement park expenses and many more. When all of your income and expenses have been entered, the worksheet will let you know if your budget is balanced which means your income exactly equals your expenses. If you have a deficit it means your expenses exceed your income. In this case you can easily reduce some of your expenditures by cutting back on one or more of the expense categories. Keep making adjustments and amendments to your budget as needed. A surplus means your income exceeds your expenses. When your budget is set try to stay on track.

Your personal budget will also include categories for establishing an emergency fund and retirement savings.

http://www.nfcc.org/FinancialEducation/monthlyincome.cfm National Foundation for Credit Counseling Budget Worksheet

http://www.money-zine.com/Financial-Planning/Debt-Consolidation/Household-Budget-Basics/ Household Budget Basics

http://www.personal-budget-planning-saving-money.com/whyabudget.html Why You Need a Personal Budget