This is the simple budget where you use four basic steps to setting up your budget; income, expenses, squeeze, and set-up. This is the quick and easy to set up a budget, especially if you have never done one before. If you need a printable, my Beginner’s Guide to Budgeting is a great one to start with or my book Build a Budget that Works will go into even greater detail on how to build a budget to make your money work for you.
1. Determine Your Monthly Income
The first step is to gather up your paycheck stubs (or look at your past month’s bank statement of deposits). Add up the totals from the past month after any taxes and make sure that when you are determining your income for the next month you look at your payday on a calendar. Some months have more paydays than others do.
If you have irregular income, I highly encourage you to watch this video to help you figure out an easier process of budgeting.
2. Determine Your Monthly Expenses
Start with the monthly expenses by gathering up all your regular monthly bills (utilities, insurance, car payments, etc.) and the statements from the last 3 months for all non-fixed payment accounts. Once you have your statements, write out by hand how much each one is. For the utilities, you will need to come up with an average based on the last three months. How you do this is by adding up all three statement totals and then dividing by 3. Round up whatever number you get and use this number for that utility/bill.
Once you are finished with determining your regular monthly expenses you should have something that looks similar to this:
Car Payment: $450
The next expenses to determine are the day-to-day ones. The best way to do this is to look over your previous month’s bank statement. When looking at your bank statement, cross out anything that does not apply, like your monthly expenses that you calculated above or your income.
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