- 1). Gather all your recent pay stubs, bills and receipts.
- 2). Add up your total household income. If you have a variable source of income through a business or other source, determine your average amount of monthly income for the last six months and use that figure.
- 3). Using a calculator, add up all of your regular bills including your house payment or rent, utility bills, car payments, credit card bills and so on.
- 4). Estimate your other expenses such as groceries, clothing, gasoline and so on. Add those figures into your total for your regular bills.
- 5). Compare your income totals with your expense totals. If your monthly expenses exceed your monthly income, you'll need to either bring in more income or cut some expenses. Adjust the amount of expenditures until your income exceeds your expenses.
- 6). Write down the amount you've designated for each budget category in a notebook or on a computer spreadsheet. Consider this to be a first draft of your budget.
- 7). Each time you make an expenditure or receive some income, make a note of it for the appropriate category on your budget.
- 8). Adjust your budget as needed. For example, if you budgeted $500 per month for groceries and are consistently spending over $600 per month for groceries, then you need to make this change in your budget. Increasing the amount of money in one area of a budget might necessitate reducing the amount of money in other budget categories.
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