Budgeted for Life
You budgeted for unforeseen emergencies, you paid your bills and you reached financial success. Here is a how to guide for budgeting so you can get the most out of life.
Get a free sample budget here. A personal budget plan is a tool which uses your expected future earnings and expenditures and serves as a guide to help you with your spending and saving. Therefore, a budget can aid you in paying your bills on time, cover unforeseen emergencies, and reaching your financial goals. Go ahead, use the sample budget to create your own personal budget.
Monthly Budget
Record your spending habits for a month or two and compare these expenditures to this model. In doing this, you can quickly identify areas in which you are overspending.
To set a monthly budget, follow the steps below and download the sample Budget. Write a dollar figure next to each relevant source.
Sum up your income
To determine how much income you have, add up all the sources of earnings. Include your salary, interest, pension and any other sources of income. For your salary you want to consider the total of your pay stub after deductions. If you are paid month, enter the amount as it appears on your pay stub. If you don’t get paid on a monthly basis, use the table below to calculate your monthly pay after deductions. For example, if you get paid on a weekly basis, multiply the amount on your pay stub by 4.333. If on the other hand, you get paid every two weeks, then multiply the amount on your pay stub by 2.167, and so on:
| Pay Frequency | Conversion to Monthly |
| Weekly | Multiply by 4.333 |
| Biweekly (every two weeks) | Multiply by 2.167 |
| Twice a month | Multiply by 2 |
| Irregular annual income | Divide the net total by 12 |
Other sources of income you will want to consider include but are not limited to interest income, spousal support, child support, tenant rent, and other payments. In the same manner as above, determine a monthly average for these sources of income. Make sure that the figure you write down is the amount you receive from each income source on a monthly basis.
Estimate Expenses
Keep track of how much you spend each month. Add up how much you are spending in each category. If some of your expenses vary significantly from one month to another, then take a three-month average for your total. For some categories, you might choose to divide them into more narrow sub-categories. For instance, you might prefer to separate food, clothing, and entertainment. The downloadable worksheet divides spending into fixed and flexible expenses.
Calculate the difference
After you complete the steps to sum up your monthly income and your monthly expenses, then you can calculate the difference between the two. If your income is greater than your expenses then you are spending less than you earn. However, if your income is less than your expenses then you are spending more than you earn. Therefore, a positive number is a good thing and a negative number indicates that you need to cut back your expenses.
Track Budget Variances
Having done this, you have created a budget! Remember you can download a sample budget to create your personal budget. The final phase is to make adjustments as needed to achieve your desired financial goals. The key is to record your actual income and expenses, against what you budgeted. This way you ensure you are on track to achieving your financial goals.
The budget variance is the difference between what you planned to spend (budgeted expenses) and the amount you actually spent. You may be surprised at the beginning, but then you will quickly understand where your money is going.