Budget Planning- Make Your Money Your Own

Financial stability isn’t necessarily about how much you make, but how you choose to spend it. Budget planning is the act of making sure you’re spending what you receive in all the right places.

The first step to money management and financial stability is creating a monthly budget. This may sound intimidating at first, but budget planning is worth the investment if you’re not doing it already.

Budget Planning 101

A budget is simply reporting all sources and amounts of your monthly take-home pay, and tracking where you spend it all-- giving you an idea of “need” expenses (rent, mortgage, groceries, electricity, etc.) and “want” expenses (entertainment, eating out, etc.). Knowing where you spend your money and where you can cut back is the first step toward effective money management.

Budget Planning- Putting it to Paper

First, you need a plan, and we’re here to help. Start by downloading our simple budget planning sheet (PDF).

Once you’ve downloaded the sheet, come on back to this page. We’ll wait.

Got it? All right, Let’s get started!

How to Use Your Budget Sheet

1. Fill out your Income: First off, you’ll want to enter in some important information starting with how much you make. You can easily get this information by checking the “Net” entry on your pay stubs or other income records from last month.
   • Enter your income information in the “Wage/Salaries” field of the “Planned” column (meaning planned income).
   • Do you have any other source of income throughout the month? If so, enter it in the “Other Income” field in the “Planned” column.
   • Add both “Wage/Salaries” and “Other Income” in the “Total Income” bracket. Using this total as your baseline for total monthly income, you’re ready to get started on sorting your expenses.
   • NOTE: Don’t worry about the “Actual” column for now. It will serve as your “reality check” when you measure what you “Planned” to spend vs. what you “actually” spent at the end of the month when you’ve completed Step 2 below.
2. Take Your Best Shot: Based on past expenses and what you anticipate spending this month, fill out the “Planned” column under Expenditures. This doesn’t have to be exact- that’s what we’ll measure the “Actual” column against at the end of the month (or, if you have last month’s spending tracked, you could fill it in now).
3. Track Your Expenses:This is the most eye-opening part of planning your budget. You’ll want to keep a record of all your transactions (including pay stubs, etc.) for a full month. You may have already done this and have this information on a bank account or check book or via receipts. If not, while this process may sound daunting, using your debit card or a carbon copy checkbook for most purchases, it should be pretty easy-- you can check your bank account statement or checkbook. If you use cash, remember to keep your receipts and store them in an envelope for the month. Once the month is over, use the budget sheet’s Expenditure “Actual” column to sort your receipts and what you spent money on.
   • “Other” fields are used to make custom Expenditures. For example, if you tend to spend money on eating out, replace one of the “Other” fields with “Eating Out” (or any other additional expense- cable, internet, clothes, etc.).
4. Add and Subtract: Once you’ve completely filled out your spreadsheet, the rest is a matter of addition and subtraction:
   • In the “Total Expenditures” field at the bottom of the spreadsheet, add your “Actual” expenses and enter the total.
5. Compare and Adjust: Here’s where the rubber meets the road and you find out if you’re spending more than you make... and more importantly where you may be able to adjust:
   • Subtract the “Total Expenditures” fields from the “Total Income” fields completed earlier and enter it into the “Income after Expenditures” field.
   • The “Income after Expenditures” field shows you how much you were over (or under) your monthly planned and actual budgets.
   • Reviewing what you spent the previous month, you can now find where you might be able to adjust expenses.

Budgeting takes time, effort and a little bit of self-control but ultimately pays off with the comfort of knowing you’ve placed yourself in control.