How to Create a Home Budget

A budget is a listing of probable incoming and outgoing money. There are two lists, sources and amount of income and destinations and amount of payments. Budgets are, generally, listed by categories. For a home budget, outgoing categories might be bills, food, clothing, etc.

Using a budget, we can (first and foremost) make sure we are not spending more than we are making. We can also look for ways to spend less, free up money for savings, or see if we need to create more income.

Budgeting is the best way to take control of your money.

1. Figure out what's coming in - This should be pretty easy. Just grab several of your last paychecks. Add up the stubs from one month. That's your monthly income. If you have more than one source of income, add them together.

2. Add up your expenses - Only include expenses that HAVE to go out. Things like bills, rent, car payments, credit card payments, and the like are included, here.

3. Subtract your expenses from your income. If you have a positive number, great! If the number is negative, you've got a problem. You will need to figure out how to bring in more money, or cut your required spending. If you are in this category, you are not alone. Many people spend 10% more than they make. However, if you are already spending more than you bring in, you need to fix this, before moving on to Step 4.

4. Split up what's left over - You can now allocate what's left over. Make a list of things you need or will need: Food, clothing, shoes, etc. Allocate a portion of the left over money to each of the items on your list. This will be somewhat of a guess, at first. You'll need to track the money you spend on these, every month, to get a better idea of what you "normally" spend.

5. ...and... repeat - Revisit your budget every month. Track what you spend. Figure up monthly averages and reallocate your "left over", accordingly. Yes, this takes time, but, it's worth it.