Create a Monthly Budget

 A monthly home budget is a guideline that allows you to anticipate you monthly expenses by spending your income on paper before the month begins. A good home budget is essential for any successful personal finance plan and is the first step in getting control over your money instead of letting your money control you. A home budget is easy to set up by using last months income and expenses as a starting point. If you are a worker that gets paid on commission or with tips (a variable income employee) it might be necessary to average several months of income before nailing down your budget. After that, the process is basically the same.

A Monthly Spending Journal

It is helpful when setting up a budget to keep a journal of expenses for several months. This will allow you to see trends in your spending and allow you to have an idea of how much money to allocate to the different categories of your budget. Simply keep a small steno pad with you and each time you spend money record it. The size of the transaction does not matter. You want to see where each dollar in a given month is spent. The results will often times shock you.

Categorize Your Spending

The best way to categorize your spending is by using a budget form. There are several websites that will allow you to download a budget template for free. I have found them in word documents as well as excel files and they work great. One word of warning, don't allocate money to a category just because the category is there.  A generic budget form is designed to accommodate multiple users with a wide range of spending habits. Use only those that apply to you. For instance, it would be silly to allocate money to daycare if you are a single person with no children. Categories will be separated by the main spending category and possibly several sub-categories. For instance your housing category may look like this.

HOUSING

• Mortgage ________

• Insurance ________

• Utilities

Electric _______

Water/sewer _______

Gas ______

You get the idea?

Budget Guidelines

A budget guideline is a suggested percentage of your income that should be allocated to each category. The budget guideline I use looks like this

Percentage of Income	Expense Description
Gross income 10% God/church Net Spendable Income(net income minus 10% of gross)
35%	Housing
10%	Utilities
18%	Transportation
10%	Food
2%	Clothing / Attire
5%	Misc. (eg Phone, Internet)
5%	Medical Expenses
5%	Other Debt
6%	Savings
4%	Entertainment

In my guideline ten percent of my income is allocated for tithe to my local church. Since I am Christian, I make this a priority in my life. I understand that each person that reads this may not feel the same way, but I do encourage giving because it puts money into its proper perspective. There are wonderful charities that do good work if you do not have a particular religious conviction. Note, this guideline is set up for tithing on gross income. To determine net spendable income subtract the tithe from the net income and the remaining amount is net spendable income. These guidelines can be adjusted for your own personal needs. If you only spend 20% of NSI on housing, the remaining 15% can be added to another category, preferably savings.

Now You Are Ready!

That is basically all that is involved in creating a home budget. Now you are ready to begin the process of taking control of your finances. This is a trial and error process so let me encourage you, if at first you make some mistakes, don't get discouraged. I teach this stuff all the time and I still make mistakes.  The key is consistency and dedication.