With just a few short months left until the end of the year, it’s the perfect time to start working on your family budget. I typically revisit our budget at the start of every year, as well as whenever there’s been a change to our financial status. Budgets require constant monitoring and refinement, but don’t feel intimidated. Just start at any time and take a look at it each month. Here are tips for how to make a budget, as well as a free budget worksheet that you can use for a starting point.
How to Make a Budget
This is the most important thing. Even if it’s not entirely accurate, it’s essential that you get started. You’ll be revisiting your budget on a regular basis, so don’t be afraid of getting something on paper. It can always be revised.
Gather Essential Data
When you set out to make your budget, you’ll want to gather some essential things. Pull out your check register and credit card receipts for the past few months. If you use cash on a regular basis, it’s also a good idea to track your cash expenditures for a few weeks. That is less important if you mostly use credit cards, checks, and debit cards.
Remember Inconsistent Expenses
You’ll want to include all of your expenses in your budget. Start out with those expenses that are regular – things like insurance, car payments, and mortgage/rent. Those should be easy to estimate.
Other expenses, like food, clothing, and gas, may be a little more challenging. That’s when you can look at your historical spending (by reviewing your credit card and bank statements).
Inconsistent expenses are even more difficult to estimate. These are things like medical expenses, personal care, car maintenance, etc. You may want to estimate those for a few months and then see how you are doing.
Budget by Month
In some cases, your expenses will vary by month. For instance, here in the Northeast, we spend a lot on heating bills in the winter. I think it’s a good idea to create a budget by month. That way, you’ll know when you have extra money (which you can put into savings) or when your budget is especially tight.
Monitor Your Progress
Making your budget is just the first step. It’s equally as important to constantly monitor your budget to see if you are actually following it. If it’s not accurate, make changes to ensure that it is accurate. Or, make changes to your spending.
You should also take this opportunity to review your expenses to see if anything can be reduced. You may be able to negotiate better prices on your cable bill, cell phone expenses, and insurance.
Don’t Forget Savings
You’ve probably heard that you should “pay yourself first”, but it’s absolutely true. Make sure that you are saving for things like your emergency fund, college savings, and retirement, as well as for discretionary spending like vacations.
Free Budget Worksheet
If you need a good starting point, download our free budget worksheet. Keep in mind that this may not include every category that you need, but it’s a great place to start. Print this for each month, and place them in a binder so you can easily access them.
Do you have any tips on how to make a budget?