How I Make and Follow a Budget

Making a budget is helpful when it comes to finances. It allows me to know how much money I have and what I can spend it on. It also allows me to put money into a savings account in case of emergencies. For a budget to work, I of course have to use it consistently. I keep my budget in a spiral notebook.

Incoming Cash

The first step in creating a budget is to know how much incoming cash I have each month. Income that is variable can prove to be a little more tricky and will have to be updated every month. With a set income, it is easier to create a budget that will carry over month to month.

Bills

The next step in creating a budget is to know how much the bills total for each month. I also add categories to my budget and allow money to accumulate for such expenses as clothing. I make a list of everything I spend money on.

My list looks something like this:

• Mortgage
• Gas and Electric
• Cell Phones
• Water
• Food and Necessities
• Alarm
• Gas for cars
• Medical Co-Pays
• Clothing

This is in the first page of my spiral-bound notebook.

Next to each category is a dollar amount that shows how much money goes into each category each month. In categories such as mortgage the finances will be exhausted and replaced each month. In categories such as clothing I can spend the set amount each month or allow the amount to build up over several months for a larger clothing fund.

Keep All Receipts and Keep Track of Spending

In the following pages of my notebook I have a page for each category. When finances come in I write the date, the amount being added to that category, and the balance. Incoming cash is considered accounts receivable. As I spend money I write the date and amount of the expense and subtract that number from the previous balance. Cash spent is considered accounts payable and is recorded in parenthesis to show it is an expense rather than incoming funds.

When I spend money and record it in my budget it will look like this:

Date Amount Balance

8/15 (20.21) 332.21

Making and following a budget can be time consuming, but I find that it is well worth the effort. It stops me from spending money I don't have and helps me to be in control of my finances. I don't like blindly spending money.