How to Develop a Budget
(1) Write down your essential monthly expenses. Keep a record for one full month of all that you spend on food, utility bills, car expenses, and the like. For bills that are paid annually, divide by 12 for the monthly amount.
(2) Organize expenses into categories. These include food, housing, automobile and travel costs, and so forth.
(3) Figure out how much of your savings must be applied monthly to each category. With bills paid annually, you must “calculate” how much needs to be put aside each month.
(4) Write down the combined net earnings of all in your household. Subtract deductions such as taxes. Compare this with the expenses.
(5) Set aside monthly the amount needed to satisfy each category. If using cash, a simple way is to mark envelopes for each category. Then periodically place cash in the appropriate envelope needed to cover the designated expense.
Caution: If you use a credit card, do so responsibly! Many a budget plan has been ruined by the temptation to ‘buy now, pay later.’
