Budgeting Your Money in Five Key Steps
By Lexy Kassan
Creating and keeping to a personal budget can be tough. That’s especially true when lifestyle changes occur or when it feels like you’ve got more money going out than coming in. But it is precisely at that time when a budget and financial plan are the most crucial.
- Gathering Income
You may get your income in any number of ways from any number of sources. Paychecks, tips, gifts, alimony, child support, or government-sponsored programs – all of it enters your bank account or pocket at some point in the month. When just starting out, it’s helpful to put all of the money into one account, at least temporarily, so that you can see the total you have coming. Only use money that you receive routinely as the basis for your budget. Do not include one-time gifts or repayments not expected on a continual basis. - Managing Bills
Gather your bills together, or print a copy of your online bank statement if you use online bill payments, as a reference. Even your check ledger can be used to see which bills will come due on a monthly basis. Note the cycle date (the end of the billing period) and the due date for each of these bills. The due date is usually about two weeks after the cycle date. Keep track of these dates on your calendar, cell phone, or whatever else keeps you organized. - Timing Payments
Most people receive income more than once per month. This could be from weekly tip money, semi-monthly paychecks, or biweekly direct deposits. Whatever your pay schedule, budgeting your money relies on having a balance in your account when you have to make a payment. Use your knowledge of when each bill is due to schedule the payments. The payment for a bill will likely be taken from the check prior to the due date. - Monitoring Variable Expenses
Variable expenses are anything not billed on a monthly basis, but rather spent out of pocket throughout the month. This could include groceries, prescription medication costs, gas for your car, or anything else that is a routine necessary cost. Look over your purchases for these types of expenses in the last few months (from your checkbook or statements) and find the average amount spent per category. Set this amount of your budget aside after your bills have been accounted for. - Repaying Credit Card Debt
If you are carrying a hefty credit card balance, it is in your best interest to plan a chunk of money towards paying them down. Find your interest rate for each credit card – it should be listed on your statement or will be available online if you manage your card over the internet. Note the most recent balance and minimum payment.