When it comes to personal finance, one of the most important things you can do is decide on a budget. By taking an honest look at how much money you have and how much you can spend each month, you’ll be well on your way to being able to put some money aside in case of future emergencies.
Lay It Out
The first thing you’ll want to do is really lay out how much you make and what your expenses are. The easiest way to do this is with an Excel spreadsheet. You’ll want to have a total for how much your gross earnings are. As you add in items, have the Excel cell subtract the amount from this total.
The first things you’ll put in are items that are the same every month. This would include things like taxes, health insurance premiums, rent or mortgage, utilities, etc. For things that change every month, such as food, entertainment, gas, etc., go through the past three to six months of statements from your credit card and debit card statements to get an idea of how much you spend. Decide on the appropriate amount and add it to your spreadsheet.
Last of all, add in incidentals and things that you spend money on every once in awhile. You should save money for these items (such as clothes) every month. For example, if you spend $600 on clothes every 6 months, then save $100 a month so you’ll have $600 to spend when you need new clothes.
Once you’ve done all that, decide on an amount to put into your savings account. This ideally will be 10 percent.
