- 1). Outline your budget. Create a list consisting of the sources of your income and each of your expenses. Under expenses, include items such as utilities, rent, loan payments and entertainment expenditures.
- 2). Create a budget template. You can use simple pen and paper, or you can use a computer program such as a word processor or a spreadsheet. On the template, include four columns. In column A, list your income and expenses (separate income and expenses by a space or two for readability). Title column B “Expected” and column C “Actual.” Title column D “Difference.”
- 3). Calculate your expected income and expenses. You may need to review your past financial statements and receipts. Average variable expenses, such as entertainment costs, as necessary.
For example, if you spent $50 on entertainment costs in September, $60 in August and $55 in July, you can determine expected entertainment costs in October by averaging the three numbers ($55 average). - 4). Write in the expected costs on the lines in your budget. Treat these numbers as limits during the month and monitor your spending so that you do not exceed the expected costs.
- 5). Review the budget at the end of the month and fill in the actual costs. Subtract actual costs from expected costs to determine the difference and to determine whether you stayed within your budget or exceeded it.
- 6). Analyze any over-spending. For example, in the income section, perhaps your expected income was more than you actually received, and your expenses were greater. Determine where you can make cuts.
- 7). Create a new budget each month and repeat the steps. Analyze your spending over time.
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