BUDGETING 101, PART I: GETTING THE BIG PICTURE
For many people, putting themselves on a budget feels like the world is coming to an end. But budgets can also bring peace of mind to those who want to effectively manage their money, plan for the future, and save for emergencies. It’s important to be realistic about both your income stream and your spending. Sometimes it’s not a perfect world and everything changes from month to month. All the more reason to work it out on paper and see how you can take more control during times of instability. So let’s take a look at the two basic categories that make up a budget, your income and your expenses.
NOTE: We’ve provided a sample personal budget here you can use as a template to design and calculate your budget - it will give you an idea of items to include and help get you organized.
First, list all your income sources at the top of a piece of paper (or use the Excel spreadsheet). If you’re married or have a partner that you split the bills with, include the income they contribute as well. It should include the amount of all wages, tips, bonuses, tournament winnings, etc. that you TAKE HOME, not your gross pay that hasn’t had the taxes and other pesky expenses taken out yet.
Next, take a hard look at the past few months bank and credit card statements. Write down all your expenses that are pretty consistent and tend to cost about the same each month. These are your FIXED EXPENSES. Fixed expenses include things like rent or mortgage, utilities, cell phone, insurance policies, loan, car or credit card payments. List all of these and the amounts below the Income section.
Now, take a close look at the expenses that may fluctuate up and down each month. These are called your VARIABLE EXPENSES and include things like grocery bills, travel, entertainment, car or home repairs, fuel, clothing purchases, etc. List these and the average or common amount below the Fixed Expenses section.
Finally, subtract both Fixed and Variable Expenses from your Income. If the result is a positive number, great job, you’re on the right track. If it’s not, don’t panic. Our goal is to help you, whether your budget number is positive or negative, to give thought to improving your bottom line. When you’re ready for Part II, which provides the tips and guidance we promised you, you’ll find it here.
NOTE: We’ve provided a sample personal budget here you can use as a template to design and calculate your budget - it will give you an idea of items to include and help get you organized.
First, list all your income sources at the top of a piece of paper (or use the Excel spreadsheet). If you’re married or have a partner that you split the bills with, include the income they contribute as well. It should include the amount of all wages, tips, bonuses, tournament winnings, etc. that you TAKE HOME, not your gross pay that hasn’t had the taxes and other pesky expenses taken out yet.
Next, take a hard look at the past few months bank and credit card statements. Write down all your expenses that are pretty consistent and tend to cost about the same each month. These are your FIXED EXPENSES. Fixed expenses include things like rent or mortgage, utilities, cell phone, insurance policies, loan, car or credit card payments. List all of these and the amounts below the Income section.
Now, take a close look at the expenses that may fluctuate up and down each month. These are called your VARIABLE EXPENSES and include things like grocery bills, travel, entertainment, car or home repairs, fuel, clothing purchases, etc. List these and the average or common amount below the Fixed Expenses section.
Finally, subtract both Fixed and Variable Expenses from your Income. If the result is a positive number, great job, you’re on the right track. If it’s not, don’t panic. Our goal is to help you, whether your budget number is positive or negative, to give thought to improving your bottom line. When you’re ready for Part II, which provides the tips and guidance we promised you, you’ll find it here.
