Living on a Budget

Strong money management begins with a budget. Unfortunately, many have a negative attitude toward living on a budget, but it does not have to be restricting; it is just part of the entire money management process. You have established your financial goals, now you have to develop a plan to achieve those goals…that is your budget.

Track What You Spend

The first step in creating a budget is to track what you spend. Using the following worksheet, write what you spend each day on the items listed; add any additional items in the spaces provided.

You will notice that the first thing we have listed in the worksheet is “pay yourself.” It is critical that you pay yourself before you do anything else so you can begin to establish savings needed to meet your goals and keep you financially stable in any type of emergency. The rule of thumb is to save 10 percent of your gross income each month. For example, if you make $1,000 per month, be sure to pay yourself at least $100.

Spending Worksheet 

Monthly Income

Next, you need to focus on your monthly income. In the worksheet below, you will be asked to type in all of the income you receive in a typical month. Take a moment to fill in that information now.

Income Worksheet

Monthly Expenses

It is important that you track what expenses you have on a monthly basis. Take a moment to fill out the worksheet below and print it for future use.

Monthly Expenses Worksheet

Discretionary Income

Now you are ready to see how you are doing with your financial management. In the following worksheet, your monthly expenses will be subtracted from your monthly income to calculate the money you have left over, or your discretionary income. That doesn’t mean you want to spend all of your remaining income, it just provides you with a look at what you have available to either spend or save. You can adjust your budget accordingly based on your financial goals.

Click on the Discretionary Income Worksheet below to find out what your discretionary income is at this time.

Discretionary Income Worksheet 

Realign Your Budget

If you have money left, be sure to realign your budget to find a place for each penny you have. If you do not have any money left, you will need to take a look at one of two things:

  • Can you bring in more income?
  • Can you reduce your expenses?

Needs vs. Wants

As you can imagine, it is usually easier to reduce your expenses than increase your income. Take a look at what you are spending on a regular basis and see where you can make significant changes. You want to base your decisions on “needs” vs. “wants.” Take a moment to go through the NEEDS VS. WANTS exercise to see how to determine the difference.


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