Plan a Budget Step-by-Step

Plan a Budget Step-by-Step

Presented by Charles L Harmon

One of the things many of us hate to think about is having a budget. But if times are hard or you don’t have unlimited money, a budget can help many of us. Using a budget is one of the best ways for you to determine where you stand financially so you can plan for future expenses. A budget can help you live within your means, get out of debt, and have money available for a new car, vacation, or education.

Planning and using a budget doesn’t have to be complicated. Plus, once you’ve put your budget into place, it makes spending decisions a snap.

How to plan your budget, step-by-step:

  1. Set goals for yourself. Before you begin to plan, it’s important to know what your financial goals are.
    • Do you want to save for a new home?
    • Have you always wanted to travel overseas?
    • Are you thinking about your children’s educational future?

    Write down your family’s financial goals and post them where everyone can see them. This will help everyone remain focused on reaching your financial goals rather than giving in to temptations to spend on unnecessary things.

  2. Figure out your income. Know how much money you have coming into your home. It’s hard to establish a budget if you don’t know how much money you have available. This includes:
    • Employment income for everyone contributing to the budget
    • Interest earned from money markets, savings accounts, or investments
    • Inheritances
    • Any other income

  3. Figure out your expenses. Write down family’s expenses. List each bill. It will help you determine how much money you need to earn each month to reach your financial goals.
    • List all bills your family has regardless of how often it’s paid.
    • Group like expenses together (insurance, credit cards, utilities, etc.) for easier calculation.
    • Include daily cash for such as money for gas, lunches, tolls or parking.

  4. Include savings. Remember to pay yourself first! Instead of waiting to determine what money is left after paying your monthly bills, include your savings account as a bill and pay it first, then other expenses.
  5. Subtract expenses from income. Add together all income sources, then all expenses. Subtract expenses from income. This will indicate what financial shape your family is in.
  6. If your income is greater than expenses… If you have money left after paying the bills, you may choose to do one of the following:
    • Put additional money in savings.
    • Invest extra money using a financial planner.
    • Pay off credit cards or other monthly credit accounts.

  7. If your expenses are greater than your income… You have some decisions to make. They may not be pleasant, but if you want to get out of debt, changes are necessary.
  8. Here are some changes you may want to make:

    • If your home is too large consider downsizing into a home with lower payments.
    • Do you have extra vehicles? If two or more cars are necessary, by all means keep them. However, you may be able to buy vehicles that are cheaper to own and maintain. Why not sell the extra ones id not really needed?
    • Eat at home. A family of four can easily spend $40 or more each time they eat out. That same amount of money can buy groceries for several meals, instead of just one.
    • Stop credit card spending. Cut up your credit cards. Eliminate wasteful spending.
    • Close each account as you’re able to pay off each credit card. Use the money you used to spend on that card and add it to your payment for the credit card with the next highest interest rate. This process accelerates the elimination of your debt.

It’s possible to create a budget you and your family can live with. By following these step-by-step instructions for planning a budget, you’ll be taking a big financial step forward. Stick to your budget.  It won’t take long and you can be out of debt and the rat race.

Charles is studying how to command luck and Online Marketing.

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