7 Easy Steps To Create A Budget

7 Easy Steps

To Create A Budget You Can Live With

First let’s not call it a budget. That sounds too much like something you are going to do temporarily. (Like a diet) Instead think of it as a spending plan. A plan is something that is sustainable. Something you can do for a long time. The plan will be revised from time to time. But once you have a spending plan it takes the guess work out of a big part of your financial planning. So consider the following;

  1. Gather up your pay stubs, bills and investment account statements.
  2. Figure out and write down what your monthly income is.
  3. Write down a list of your expenses and bills.
  4. Break your list of expenses into fixed and variable categories.
  5. Total up your expenses and income. Hopefully your income is more than your expenses.  If so decide what to do with the excess. Do you need more emergency savings, to reduce debt or to save for retirement?
  6. If your expenses are more than your income it’s time to take a serious look at how you can balance your budget before things get out of hand.
  7. Review your plan at least every 3 months to see how you are doing. As your income and bills change, modify your plan. A pencil with a big eraser is an important tool when you are working on your spending plan.

The most important step is to start working on your spending plan. Block out an hour and get started. Starting is the hardest part of any worthwhile endeavor.

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