| Preparing
Your First Budget
A budget is generally
thought of as a rigid plan on how you can spend your money. While this
is true, you may want to think of it as a "household spending analysis."
That does not sound so tedious and it better implies how you can use it
to build a solid financial foundation and feel more in control of your
finances.
Why is it important?
Generally speaking, a spending analysis will enable you to understand
where your money comes from and where it goes. With that understanding,
you will be in a better position to make informed financial decisions,
to monitor your spending and to potentially identify ways to spend less
on some items so you have more to spend on more important things or to
save.
Components of a
spending analysis
Going through the effort to prepare a completely accurate analysis can
be difficult and time consuming. The more specific you can get the better,
but do not let the thought of preparing an analysis keep you from trying.
Here is a form that can help.
Monthly Household
Spending Worksheet -- Date Prepared _________
| Monthly Expenses |
Current |
Goal |
Comments or Observations |
| Savings |
$ |
$ |
|
| |
|
|
|
| Housing
Expenses |
|
|
|
|
·
Mortgage payments or rent |
$ |
$ |
|
|
·
Property taxes |
$ |
$ |
|
|
·
Maintenance or repairs |
$ |
$ |
|
|
·
Utilities (gas/water/electricity)
|
$ |
$ |
|
|
·
Telephone/cable/Internet
|
$ |
$ |
|
|
·
Housekeeping, laundry
|
$ |
$ |
|
|
·
Other housing expenses
|
$ |
$ |
|
| |
|
|
|
| Transportation
Expenses |
|
|
|
|
·
Car loan or lease payments |
$ |
$ |
|
|
·
Fuel, maintenance, repairs |
$ |
$ |
|
|
·
Auto insurance |
$ |
$ |
|
|
·
Public transportation |
$ |
$ |
|
|
·
Other transportation expenses |
$ |
$ |
|
| |
|
|
|
| Food
& Entertainment Expenses |
|
|
|
|
·
Groceries |
$ |
$ |
|
|
·
Restaurants |
$ |
$ |
|
|
·
Sports, hobbies, pastimes |
$ |
$ |
|
|
·
Books, magazines |
$ |
$ |
|
|
·
Vacations |
$ |
$ |
|
|
·
Other |
$ |
$ |
|
| |
|
|
|
| Health
Care Expenses |
|
|
|
|
·
Doctors, dentists, etc. |
$ |
$ |
|
|
·
Prescriptions |
$ |
$ |
|
|
·
Health insurance |
$ |
$ |
|
|
·
Other health care expenses |
$ |
$ |
|
| |
|
|
|
| Family
Expenses |
|
|
|
|
·
Schools, colleges |
$ |
$ |
|
|
·
Child care |
$ |
$ |
|
|
·
Alimony and child support |
$ |
$ |
|
|
·
Other family expenses |
$ |
$ |
|
| |
|
|
|
| Other
Expenses |
|
|
|
|
·
Clothing, shoes, etc. |
$ |
$ |
|
|
·
Charitable contributions |
$ |
$ |
|
|
·
Gifts, birthdays, holidays |
$ |
$ |
|
|
·
Pets, veterinarian expenses |
$ |
$ |
|
|
·
Paying off debts or credit cards |
$ |
$ |
|
|
·
Life and disability insurance |
$ |
$ |
|
|
·
Walking around money |
$ |
$ |
|
|
·
Other |
$ |
$ |
|
| |
|
|
|
| |
|
|
|
| Taxes |
$ |
$ |
|
| Social Security |
$ |
$ |
|
| Federal, state, local taxes |
$ |
$ |
|
| |
|
|
|
| |
|
|
|
| Total
Expenses |
$ |
$ |
|
As you start filling
in the blanks in the worksheet, think about how much control you have
over your expenses. Things like rent, taxes and insurance are probably
pretty well set. Other expenses, like food, entertainment, and gifts are
more controllable. Just by thinking about these items, you may be able
to find ways to spend less and save more. If nothing else, you can make
judgments about which expenses are most important to you.
Finally, it makes
sense to go through this exercise on a regular basis. By analyzing your
expenses every year, you will be able to see how your spending patterns
are changing and you will feel more in control of your financial future.
|