If you are in the working world, once or twice a month you should get a nice check written out to you. You may feel a burst of excitement as you imagine your bank account’s inflated balance. But this elation is quickly stifled as you remember all the bills waiting to be paid, gas tanks waiting to be filled, and school supplies waiting to be bought. By the time you check back into your bank account, you wonder, “Where did it all go?” A good personal budget spreadsheet will outline clearly and elaborately just how much money you’re bringing in and where it gets distributed to… helping your financial well-being and giving you peace of mind.
It’s incredibly important to generate financial goals for yourself, so that you do not merely exist on the money coming in. Goals come in two types: short and long term. A short-term goal is generally one that can be fulfilled within a year’s time. Examples may include paying off a particular amount of debt throughout the year, or saving up for a fancy vacation. Long-term goals are goals for your life, such as developing a retirement fund or buying a new house. These goals give you something to work toward, but aren’t intransigent. Just like your life will move in all different directions, so will your goals. Feel free to flex them as needed.
Learn your net income.
Your net income is what you earn, subtracting employer deductions like taxes, social security, 401(k), and others. If you work on an hourly wage, instead of a salary, this can be more difficult to ascertain if your hours vary from week to week. It’s imperative to your budget, however, that you’re able to predict, as closely as possible, the amount you’re going to take home every month (known as your income). It’s the only way to ensure all of your bills get covered, with hopefully a little extra for your goals.
Plan. Plan. Plan.
Separate out your monthly costs into either fixed expenses or variable expenses and ensure that your net income can cover these. A fixed expense is one that stays the same every month, such as your rent or mortgage payment. A variable expense is one that flexes every month, but no less remains a consistent expenditure. Think of things like gas, food, and entertainment as variable expenses. Record how much you spend on each of these categories using either a personal budget spreadsheet or a budget-building program. With your variable expenses, see if you can identify a pattern month-to-month so you can better forecast how much you’ll need to spend on those things in the future and plan it into your budget. If you can afford to do so, add a third basic category to your budget: savings.
Keep track of your spending.
Your budget can get completely derailed by the little expenses you wouldn’t even think to include in your spreadsheet. These are things like dining out, a new pair of shoes for your kid, or a trip to the movies. Little things have a tendency to add up and before you know it, a trip to the zoo can blow your budget. Fix this by logging all your little extras every day for a month, then add them up and include that amount into your budget. You can also collect receipts or consistently check your online banking account to ensure everything is in order.
Make your budget work for you.
Budgets are ever evolving, mostly because you are too. Your wants and needs can change, and with it so should your budget. Your fixed expenses are more likely to stay fixed until you pay off that mortgage or credit card, but your variable expenses might be altered by driving less to save on gas or eating in more often. Make your budget yours. In this day and age, money has a big say in how you live your life, so live it in a way that makes you happy.
Finessing a budget.
Here are some extra tips to help you manage your budget.
- Always look ahead. When you’re planning this month’s budget, try to keep next month’s budget in mind. Will you have the same income as this month, or more or less? If more, perhaps put a little extra in savings. If less, perhaps try to preserve a little extra of this month’s expendable income to hold you over for next month.
- Always look for ways to save. As previously stated, little things have a tendency to add up. That works both ways. By spending less on your everyday expenses, you can gradually build your bank account and savings to a more comfortable balance. Think of where you can cinch in your budget, whether it’s having a lower monthly clothes allowance or renting movies instead of going to the theater.
- Be creative in finding ways to supplement your income. Can you make jewelry or nifty crafts? The Internet has opened up a portal to starting a small side-business with your hobby or talent. If you can find the spare time, try to bring in some extra income to help with all your expenses. Sell the clothes you don’t wear. Upload your stock photos for others to utilize. Write a blog. There are many ways to bring in a few extra bucks to help out.
Stay on top of it.
A budget is only as successful as you are at implementing it. Check your budget as often as possible, adjusting it as needed. Knowing that you are ahead in the financial game will give you not only security, but also peace of mind.