Starting the budgeting process can be daunting, especially when people fear math or basic accounting tools. To begin this process, you should list all the income and expenses that occur on a monthly basis. A basic budget will have incomes listed in one column, necessity expenses in another, and unnecessary expenses in a third column. In each of these columns, the corresponding digits of the checkbook or bank statement are written. Using this basic information, the budgeting process can then begin in earnest.

List all personal income earned in the first column of the basic budget worksheet. The most conservative budgeting process is to list only the normal and repetitive income earned in jobs or other regularly paid activities. Income should be net of any taxes or periodic deductions withheld from your paycheck.

The next column contains the necessary expenses. Necessity expenses include everything you need to pay to maintain your basic cost of living. Housing, utilities, food, clothing, car payments, and similar items are necessities.

When planning your budget, you need to list all non-essential regular cash flows. This allows you to determine how much income you spend on sundries, such as dining out, personal items, or vacations and travel. Many of these items are typically one-time expenses. As you begin the budgeting process, however, you will see that each small expense can quickly add up and result in higher cash flows.

After completing the basic budgeting worksheet, start determining how much should be spent on each item. Many household budget resources provide a basic percentage level for different expenses in a personal budget. For example, housing should correspond to a maximum of 35% of total income, 20% for car payments, 15% for food, and so on for any necessary expenses. This provides a basis for comparing current budget expenditures with suggested levels of standard spending levels.

Budgeting can be easier when using a computer spreadsheet or budget-specific software program. This allows you to simply enter information and set your budget based on your specific lifestyle, income level and current expenses. The software can also provide the ability to print the budget. This allows you to keep paper records to help prepare taxes or provide information to lenders. Starting small and working in a more complicated system can also make it easier if you’re worried about how to start the budgeting process.

Joshua Newman
Author: Joshua Newman

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