1. Shine some light on your spending habits
The best way to start making a budget is to consider what you (and your family) spend your money on, on a daily and monthly basis. Here’s a list of four general categories—the first two consist of inflexible payments and the latter two are variable expenses:
- Regular Necessities (rent, food, utilities, gas, etc.)
- Bills and Loans (such as credit card bills, student loans, medical bills, etc.)
- Long-Term Savings (401k, savings and emergency accounts, etc.)
- Fun/Recreation (date night, trip with the kids, etc.)
Feel free to do this with others in your household and add on any categories they suggest to help you personalize the budget. Now, take your income and subtract out all those expenses. Include any others’ income and/or expenses in your household.
Don’t panic if the result is a negative number – this is why you’re making a budget. Designate a percentage of your income to each of these categories in order to organize your monetary priorities.