What does a budget look like?

A budget is a written plan of how you intend to spend your money over a period of time.  Usually, people set up a MONTHLY budget.

It doesn’t have to look fancy.  It can be a No-Frills simple budget.  The key is to take ALL of your income and allocate it into SOMETHING until there is nothing left to allocate.

For example, Let’s say you make $3000 a month.  You know you’ll need gas, food, electric, phone, etc.  So write out a list to take care of those things first.  It might look something like this:

Monthly Budget (June 2010) Income Expense Balance
Income $3,000.00 $3,000.00
Tithe $300.00 $2,700.00
Electric $200.00 $2,500.00
Water $65.00 $2,435.00
Food $300.00 $2,135.00
Gas $100.00 $2,035.00
Mortgage $1,500.00 $535.00
Credit Card $100.00 $435.00
Dr. Visits $80.00 $355.00
Cell Phone $125.00 $230.00
Home Owners Association $125.00 $105.00
Netflix $15.00 $90.00
Entertainment $50.00 $40.00
Clothes $40.00 $ –

The big thing to remember here is that the balance at the end of the budget should be ZERO.  This means that you have a plan for all the money you have coming in.

What if I have an expense that’s not on the budget?

The only thing you CAN do in a situation like that is take money OUT of one of the other categories.  So if you had a car repair for $100 (Something you HAVEN’T budgeted for), then you may have to lower the budget for entertainment or food (or both).

Next month, any expense categories that you didn’t anticipate SHOULD be put into next months budget so that you can plan for those expenses in the future.

Now is a good time to set aside some money for a vacation, or a car repair fund, or an emergency fund.

If you’ve allocated money to every thing you can think of,  and you still haven’t reached ZERO at the end of the budget, you can use the catch all category:  SAVINGS.

Have you had any trouble keeping a budget?

How about you, what do you think?
Notice: Only 13 More Comments Will Be Allowed in This Blog Post...

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  1. Richard J. says:

    I have reached a point that my wife and I have paid off ALL of our debts, Except for my home loan. So what I do now is budget money for an emergency fund, vacation fund, and a “I know the kids will need another loan” fund.(cant seem to get rid of that one)
    By paying off all of those crazy credit card, and car loan debts, I have reached a point that there is still a little bit left over in the budget each month. So instead of adding to one of my already budgeted funds. I make an additional $200. payment on the home loan. You would be surprised how quickly you home loan will come down with even a little money each month.
    I’m sure the kids cant wait for me to pay that one off. Then they can ask for even bigger loans.

  2. David Bibby says:

    On that front… I’d say stop enabling the kids… “tough” love comes to mind.
    That is easier said than done of course. As parents we’d do just about anything for our kids.

    Think of it this way… If one of your kids is getting themselves into trouble.. it’s “THEIR” problem right… but if you bail them out… it becomes “Your” problem.

    Of course you can’t do the whole “Tough Love” thing unless you and your wife agree to do that. You certainly don’t want that getting in between you two.

  3. Alissa says:

    We are not debt free but certainly working in that direction. We have recently sold our house and living in a camper. We are currently wrapping up our final utility bills, etc associated with the house. Once we get past that…we will re-do our budget. I can’t wait to see the new “debt snowball payments”!

  4. David Bibby says:

    Many people would think you are crazy for downgrading to a camper, but I applaud your decision.

    When you are in a lot of debt.. you must to something DIFFERENT to make your journey to financial freedom start off well and finish well.

    Without that high mortgage payment… It won’t take you long to pay off all your outstanding debt.

    Extrapolating a little further… you could be saving for a new house cash while living in the camper.

    Possibilities are endless when you are debt free…

    I am extremely excited for you!

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