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Learn and Plan | How to make a monthly budget
A pair of hands working on a computer to create a monthly budget.

How to make a monthly budget

Monday 10 August 2020 | Reading Time: 3 minutes

Creating a budget and sticking to it is one important financial move you can make. A budget can help you spend less time wondering where your money went and you’ll be actively working to achieve your goals. In other words, a budget can help you take some control of your life. Here are six ways to help you start crafting your budget.

Write down your income

To make a budget you’ll likely need to gather some information. The first step is to determine what your monthly income is. You can probably determine this by taking a look at your pay stubs, bank statements, or online account to see what has been deposited from your employer. Be sure to jot down your after-tax income. If you bring in additional income from a part-time job, seasonal work, bonuses, child support, or some other source, include that money as well. If your income varies from month to month, write down the lowest amount you expect to receive in a single month. Once you’ve tallied all the total amount of money you expect to make for the month, write down that number. 

Calculate all your expenses

Your list of expenses should be as detailed as possible. Try to include items beyond the biggest expenses such as your mortgage, rent, utilities, or car payments. To create the list, gather all of your monthly bills and any bills you pay on a less frequent schedule like your car registration. Some items to consider include:

  • Mortgage
  • Rent
  • Cell Phones
  • Internet
  • Television
  • Water
  • Electricity
  • Gas (Home)
  • Groceries
  • Prescriptions
  • Savings
  • Tuition
  • Storage
  • Pet Care
  • Hair Cuts
  • Entertainment
  • Gym membership
  • Home improvement
  • Car payment
  • Car insurance
  • Gas (Car)
  • Credit card payments

Make a budget document

Once you have all of your income and expenses calculated you can create your monthly budget. A good way to start is to subtract your total expenses from your total income each month. If you determine you have some money left over you could put that in savings or reallocate it for something else like increasing your credit card payments. If the balance comes out negative, you may need to cut back on your expenses or find a way to increase your income. Evening out your budget may just be a matter of making small adjustments. Cut back on non-essentials first, like the number of times you eat out at restaurants. If the deficit is more serious, you will probably have to make some serious decisions about your finances.

Keep track of your progress weekly

Your budget is a tool that can help you set your financial goals, but you’ll most likely need to commit to that budget if you want to be on top of your expenses. To help yourself stay on the right path, track your spending each week. This will help give you a clear picture of how much you’re spending and how much money you have at any given time. If you overspend in any given week, you’ll have the opportunity to make adjustments to your spending before the end of the month.

Consider automating your bills

Automated bill payments can make your life easier by creating a system where your money is going to the right places without additional effort on your part. Along with convenience, automated bill payments can help prevent late charges and save you from having to remember details, like when a bill is due. Choosing to automate payments can also help reduce the stress that comes from worrying about whether or not you've paid a bill, or wondering where you put your latest credit card statement.

Revisit your budget

It's a good idea to revisit your budget once a month and give it a once-over to make sure everything is on track. Your financial situation can change, so you’ll want to be prepared to adapt your budget to what happens in your life. You could lose your job, take on new debt, or experience a major life event like getting married or having a kid, for example. Look over your budget in detail once per quarter and make any adjustments needed.


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