Budgeting Tools

• 1). Record household income. Kiplinger.com offers a worksheet for setting up a household budget. How much is your take-home pay (after taxes) over the course of a month? Simply multiply your weekly paycheck by 4 to determine your monthly gross. What is the monthly take-home pay of your spouse? Do you have any other source of monthly income and what is the total? Add all these totals together and you have the ceiling figure for your monthly household budget, or the maximum amount of money you can spend without sinking further into debt.
  
  
• 2). List your monthly fixed costs. All of us are stuck with eternal shelter costs. This is the monthly expense involved with renting/owning a home. What is your monthly rent? Mortgage? Are you making car payments? Do you have monthly insurance premiums? These are fixed-rate payments, or the bills we pay on a monthly basis that remain the same. Total these expenses up and subtract them from your monthly income. The remaining sum is what is left for the rest of your household budget.
  
  
• 3). List the cost of every additional item you take money out for. Remaining expenses in a household budget include debt such as fuel costs for heating houses and running cars. The electric bill differs from month to month. Groceries are a constant cost with prices never set in stone. These are all items for which we must project a monthly cost and then record the actual cost. Sometimes our actual cost is below our projected cost, leaving us with a surplus of cash for other items, or cash needed because our actual cost exceeded our projected cost (we paid more than we planned).
  
  
• 4). Analyze your spending. Software such as Quicken tracks and breaks down all expenses and income. It offers graphs as well as projections.
  
  
• 5). Carry a pocket notebook and record your spending so you know where your money goes. Remember, success requires honesty and honesty breeds success.