If you’re one of those people (don’t worry, I am too) who’s always thought of yourself as not being good at handling money, today is for you.
Figuring out a budget doesn’t have to be hard and soul-killing. That’s not to say this stuff is likely to be fun, but it won’t kill you, either. Let’s start with the basics.
First, figure out what you actually earn. If you’re self-employed like me, that will mean looking at your quarterly income and averaging what you make in a year. (Use your quarterly tax payments and notes to make this easier.) If you’re someone’s employee, all you need to do is look at your pay stub or find the HR account page and you’ll see what goes into your pocket, what’s for retirement, and what goes to Uncle Sam. (For our purposes today, we just need to look at the first thing.) For the sake of simplicity, I put everything into an Excel spreadsheet, which will kindly do the math for me. (If you need a sample, drop me a line and I will send you one.)
Then determine what your monthly expenses are. Start with the payments that are the same every month, like rent or mortgage payments, auto insurance, etc. Add these to the monthly expenses line of your spreadsheet. For everything else, keep a record and add that info to your expenses line. For example, what did you spend on groceries this week? Vet bills? Internet? Record all these for 3 or 4 months so you can get an idea of what you really spend. (Add some extra lines for the things you’ve forgotten the first time around.)