Steps to follow to prepare a budget
1. During one month, every time you spend money (have an “expense”), record the amount on the row of the date when you spent the money, where it crosses the column that tells what kind of expense it was. (Make your own categories, if you need to.) At the end of the month, add the amounts in each column and write the total at the bottom of each. Add all the Total amounts and put that number on the Grand Total line. 2. During the same period of time, record your income (when you receive money) where the rows and columns intersect just as you do on the Expense Tracker. Then add the columns and get the Grand Total the same way. 3. Review both documents to see if there are any large or unusual income amounts or any large expense amounts that would not normally happen in a month. If there are, lower them to a normal amount or don’t record them, if they will give you a wrong idea of what a normal month’s income or expenses are. Some of your expenses might come less often than monthly, such as car insurance, which usually comes every six months. In that case, set aside the monthly equivalent, even though you won’t send the money away until the bill comes. 4. Look to make sure the Grand Total of the Income Tracker is larger than the Grand Total of the Expense Tracker. If it’s not, then somehow you are spending more than you are receiving, and that doesn’t work!! So you will have to reduce some of those individual column amounts in the Expense Tracker to a smaller “spending goal.” 5. Now look at the “Budget Tracker - Example.” See how it’s organized, with spending maximums at the right of the name of each category, such as $40 for Entertainment. Now write the totals of the columns from your Expense Tracker after the names of the categories on the Budget Tracker. When it’s filled out, start using it during the next full month, recording all of your expenses. Keep track as you go, doing the math as shown on the “Example” sheet. 6. Be sure to write on your Budget Tracker every time you spend money. If it looks like you are going to run out of money before the month is over, then you have to cut back on your expenses so you don’t run out. You cannot go over. You cannot spend money you do not have!! 7. At the end of the month, analyze how you did. Did you record every transasction? Then see if you need to or want to change any of the budget numbers in a category, or just be more careful next month. Make those adjustments. Get a new form and start at the beginning of the next month. Good Luck!!!