Creating a Budget For Dummies

Many people struggle with getting their finances in order. They haven’t ever been very financially organized in the past, and so it seems like an insurmountable task to start now. If you’re one of those people, there is hope for you. Creating a budget is not hard. It just takes buckling down and focusing for maybe an hour. It may be a bit painful in the beginning, but as you go along you’ll get better and the task will get easier.

One of the first steps in creating a budget is determining how much money you have coming in. Calculate a monthly average of how much you make in a month, minus taxes, and write that down. The easiest way to do this is by taking a look at one of your paycheck stubs from your latest payday and one from the same time the previous year.

Another important first step is to collect any financial statement you can find lying around your house. Financial statements include bank statements, bills, and any document that has an indication of money coming in or out. This will help you physically see where a lot of your money is going.

The next step in creating a budget is to make a list of all the things you need to pay for or buy within the next month. If you at least a rough idea of how much is coming in and how much is going out, then you can start to formulate a rough monthly average of what you’re spending and what you’re buying.

Once you know how much you spend on average, take a look at your weekly and monthly activities and see if there’s any way you can turn those into more inexpensive family activities.

This average is important for you to know so you don’t go over your usual amount of spending and find yourself in unexpected debt. If you know generally how much you spend, then you can accommodate bigger purchases as well.

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