How to Establish a Personal Budget
- 1). Make a list of all of your monthly expenses and their amounts. Include bills as well as other recurring expenses, such as groceries, gas and other purchases, that are required for daily living. Do not include spending money or money for optional extras in this list.
- 2). Round all of the amounts on your list of expenses up to the nearest whole dollar amount.
- 3). Make a list of all of your regular monthly income.
- 4). Round your income down to the nearest whole dollar amount.
- 5). Subtract your total rounded expenses from your total rounded income. This gives you the amount of money you have for optional extras each month. The extra money that is automatically built in because you have rounded your expenses up and your income down creates a cushion or a buffer that you can use if an unexpected expense pops up.
- 6). Make a list of future savings goals and decide on an amount that you can comfortably save toward that goal each month. For example, if you know that you will need a new car in a few years you might want to start saving a couple hundred dollars each month so that you will be ready when it comes time to make your purchase.
- 7). Add your future savings amounts to your list of expenses and track the running balance each month so that you know how much money you have allocated to each goal.
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