Four Steps To Preparing A Budget


By Jo Ann Brown – Author - “Getting Started On Your 401(k) Plan”

Step 1 - Figure out how much income you have. Add all of your income sources together.
• Take home pay
• alimony
• child support
Step 2 - Write down what you think you will be spending in the following categories:
Housing:
• Rent or Mortgage
• Property taxes
Food:
• Groceries
• Restaurant meals
• Lunches at work
• School lunches
Utilities:
• Electric
• Gas
• Telephone
• Cell phone
• Long Distance
• Water
• Garbage
Personal:
• Prescriptions
• Laundry
• Dry Cleaning
• Hair Care
• Clothing
• Toiletries
Family:
• Child Support
• Day care
• Babysitting
• Children’s allowance
• Pet food/supplies/veterinarian
Basics:
• Furniture
• Appliances
• Home cleaning/repair supplies
Transportation:
• Car payment
• Gasoline
• Oil
• Repairs
• Tires
• Registration
• Inspection
• Public Transportation
• Parking
Insurance:
• Car
• Life
• Property/casualty
• Disability
• Renter
• Burial
Recreation and Entertainment
• Hobbies
• Vacation
• Shows/Movies
• Dining/Entertainment
• Alcohol
• Tobacco
• Lottery tickets/gambling
• Cable TV
Gifts
• Church
• Birthdays
• Holidays
Savings
Miscellaneous
Step 3 - After you have created your budget, you need to keep records of your actual income and expenses. This will help you see the difference between the amount you budgeted and what you actually spent.
Step 4 -As you track your monthly expenses, you may need to trim expenses. Cutting back is usually a better place to start than cutting out. You’ll be better prepared for emergencies if your budget is realistic and if you use it to guide your expenses.