Budgeting 102 – Steps to Making a Monthly Budget

For many, monthly budgeting appears to be a complicated task – too overwhelming even to attempt. Below you’ll find a step-by-step description of how to make a budget you can live with.

1. Be honest. Don’t try to make your budget “look good.” The budget is for you, so be honest with yourself.

2. Set 3-5 financial goals and priorities you hope to achieve, e.g. make a 10% down payment on a home in 5 years.

3. List your expected monthly income for the coming month.

4. Estimate your expenses for the coming month, including fixed and variable expenses, and keeping in mind infrequent items such as oil changes and car licensing fees. Try to categorize them into 5-10 groups.

5. Keep track of your actual spending, even if it’s just 89¢ for a pack of gum. Enter what you spend from each categorized group from step 4.

6. Identify your “Budget Busters” – habits and expenses for small items that have a big impact on your spending. Examples include daily coffee, cable TV, eating out, and other personal habits.

7. Set goals on how to bring these budget busters under control.

8. Compare your actual spending with your projected (budgeted) spending. Consider adjusting either your budget or – more difficult but more effective – your spending habits and or/your lifestyle.

If you have any questions, would like to discuss your financial challenges, or are just looking for advice, please contact us at your convenience. As always, we are here to help you and look forward to hearing from you.

1-877-OUT-DEBT (688-3328)

www.DebtReductionServices.org