Evaluating your budget

Determine your budget

When evaluating your budget you need to realistically look at what you spend and what you earn. Many times, you may be unaware of your spending habits that you have on a daily and monthly basis. You may recognize things such as rent/mortgage, electric bills, phone bills, childcare bills, and cable, but the other little things may not be so obvious. Here is a step by step view on how to get a total picture of your income versus your spending habits.

1. Look at your most current pay stubs. Gather a month’s worth to get a good idea of what your income is after taxes.
2. Calculate and write down income from all sources.
3. List out all of your major expenses for each month.
4. Use a tracking sheet (this can be a sheet of paper or an Excel spreadsheet) and note every penny you spend for the next month. This includes credit cards.
5. Once completed, sort out your expenses by category. For example, you can create a “Utilities” category for gas, electric, water, etc.
6. Calculate each category and add up all of the money spent within the month.
7. Determine whether you are living within, or spending beyond, your means.

Chances are, you will be completely shocked at the way you spend money. This overall view will help you get an idea of what your family spending patterns are and whether or not there are some areas that you can eliminate or decrease that will allow you to spend less money.
It does add up
Here are some common spending habits that can really add up.

• Eating out at restaurants and fast food chains
• Impulse buying
• Buying items that create new monthly bills or increases your current ones
• Covering other people’s financial mistakes by giving them money without repayment

Putting the budget together

What will a budget do for you?

It will define your income and expenses and help you determine your problem areas in spending.

What will a budget not do for you?

It will not solve all of your financial problems.

Creating a budget can assist you as you begin to make financial lifestyle changes. You will still be required to develop a discipline in your spending habits and learning to save. Here are some simple tips to help you get started in developing your budget.

• Figure out your goals and prioritize them in an outline or spreadsheet.
• Evaluate and understand your current financial situation. This will include knowing expenses, assets, and debts.
• Draft a one-month budget. Ensure that your budget includes planning for extraneous expenses, such as birthdays or holidays.
• Live by the budget for a month and then evaluate what worked and what didn’t. Adjust your budget while staying on target with your goals.

Do you currently spend according to a budget? If not, why? If yes, explain.








What would you like to see happen financially as you create a budget?