How to...Create a Budget

A few years ago, hubby and I took the Financial Peace Class at our church. The class was wonderful. I recommend it to all my friends that are getting married, that have teenagers leaving for college, and for anyone that just wants to learn to manage their money better.

I have learned that having a budget is crucial for saving money. It enables you to manage your money better, it gives you visibility where your money is going, and it highlights areas where you could save more.

To create a budget:

1. Get out all your bills from the last month.
2. Start making a list and recording all your bills. A sample list you may want to track could look something like:

Saving
Housing
• Mortgage/Rent
• Home Repairs
• Home Owners Insurance
  
Utilities

• Electric
• Water
  
• Gas
• Phone (cell/land line)
  
• Trash
• Internet
Automobile

• Car Payment(s)
• Gas, Oil changes
• Repairs
• Insurance
Clothing
Entertainment
Insurance (Health, Life, Disability)
Dining Out
Other (Child Care, Christmas Gifts, Birthday Gifts)
Vacation Savings (If I am saving for something like new furniture, or a vacation, it gets it's own category)


3. Get out your paycheck stubs for the month, add them up, and determine whether you are in your budget.
   
4. Analyze your budget.
   
• If you are within your budget, congratulations! Now you should start adjusting to determine where you can save.
• If you are spending more than you make, then look for areas of spending that you should cut back on or eliminate (i.e. Do you need both a land line and a cell phone?, Could you eat out less?).
5. Repeat this every month. Are you saving more? Are you eliminating debt?
   

For more information on budgeting, check out Crown Financial Ministries Financial Tools or the Dave Ramsey's Website to find a class near you.