The first step to saving money is making sure that you have a budget to help you organize your finances. If you are saddled with debt and bills, you need to create a household budget sheet that you can use to determine how much money you make, how much money you consume, and how you can further budget your income. Here’s how.
- Create the table. First of all, you need to create a table for the budget sheet. There are many computer programs that you can use to create the table. The simplest is Microsoft Word, although you can also use other programs such as Microsoft Excel and even PowerPoint. Make sure that the table has at least six columns. The number of rows depends on how detailed the budget you are making will be. For starters, you should fill an entire page with the rows.
- Gross income. In the first column, write the heading “Gross Income.” Here, you will write down all of your sources of income. If you have a job, write down your salary. Make sure that you deduce all of the taxes from your income. If you have an extra job or a sideline, also write down the income that you earn from your sidelines. If you are making a budget sheet for a household of several people, write down the income from the other people in the household who contributes money.
- Household expenses. Next, you will need to write “Household Expenses” on the second column. In the second column, you need to write down the basics that you spend on your money on, such as groceries, toiletries, and other items that you replenish each month. The household expenses also include the rent that you have to pay for your lodging, your monthly bills for gas, electricity, heating, etc.
- Car expenses. In the third column is the space for your car expenses. Keeping a car may be convenient, and provides you with the luxury of traveling at your own time and your own speed. But cars also cost a lot, including maintenance. On the third column, write down all of the expenses that you spend for gasoline, repairs, and other expenses for keeping up your automobile.
- Debts. In the fourth column, write down all of the monthly payments that you make for debt. This is a very important column where you can get a glimpse of just how much money you spend paying for your credit card, your mortgage, etc. If you know how to budget well, you should be able to reduce the debts column. There are some lucky few who can even maintain a zero balance in their debts.
- Miscellaneous expenses. In the fifth column, write down all of the expenses for miscellaneous expenses. These are the expenses that are not included in the other expense columns. Make sure that you think about your miscellaneous expenses very carefully.
These miscellaneous expenses can cost several hundred or even thousand dollars each month. Included are purchases for vacations, gifts, investments, and even magazine subscriptions.
Add the expenses from column two to five and subtract these from the gross monthly income. The result is your net monthly income. Make sure that at least 10 percent of your gross income remains at the end of each month, for you to have an emergency fund to work on in case you get sick.