You will first complete the "Monthy Budget Amount" column to the best of your ability for the next month. These should be your best, informed estimates. Should a certain category not apply to you, you can simply leave it blank or enter a zero Ɔ' in the box. Over the course of the month, track your income and spending. At the end of the month, complete the "Monthly Actual Amount" column and compare it to your original estimates. Did you overestimate how much you'd spend on clothing, but underestimate the amount you'd spend eating out? Record the difference. Though you do not need to go through this exercise every month, it is extremely helpful at the start as it helps you to develop the most accurate monthly budget to reference moving forward.
Step 1: Note your net income. The first step in creating a budget is to identify the amount of money you have coming in. Keep in mind, however, that it's easy to overestimate what you can afford if you think of your total salary as what you have to spend. Remember to subtract your deductions for Social Security, taxes, 401(k) and flexible spending account allocations when creating a budget worksheet. Your final take_home pay is called net income, and that is the number you should use when creating a budget.Tip: If you have a hobby or a talent, you may be able to find a way to supplement your income. Having an extra source of income can also be helpful if you ever lose your job.