Creating a budget is fairly simple once you understand where your money is going. Your budget will help you to make sound financial decisions. Once you can see where the money has gone, you will be empowered to make decisions about where it should go. The SocietalGlitch Personal Finance Workbook has a dedicated budget worksheet with categories that can be renamed to fit your circumstances.
Using the SocietalGlitch Personal Finance Workbook’s Income sheet you can populate your income, which will carry over to the Budget worksheet. If you used the Expense assessment worksheet during the introduction, you will have a fair handle on the amount you need for each budget category. Enter these amounts into your budget. At this time do not worry if you go over.
Developing a budget is a part of your financial planning. It is not a punishment or meant to restrict you. It is a tool to empower you by giving you insight and peace of mind.
Overspending and Non-Essentials
After you believe you have entered everything take a good look. If you are overspent in your budget you will need to reduce or eliminate your spending in a non-essential category for the following month. Remember the point of developing a budget is for the management of your money to meet your financial obligations and goals.
This is not a punishment or meant to restrict you. The effort in not overspending will become a discipline and ultimately a habit.
A Basic Budget
A basic budget will likely have the following categories. Your budget may have some additional categories or customizations.
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Income: This is reflective of all income from employers, side hustles, and any other positive cash flow.
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Utilities: Phone, electricity, heating fuel, Internet, water, and other such services.
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Savings: Money you are saving.
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Housing: This is generally rent or mortgage, property taxes, and possible a sewer bill. Essentially anything you pay to simply live in a property.
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Transportation: Car payment, auto insurance, auto maintenance, fuel.
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Food: Groceries
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Debt: Any outstanding debts you are trying to pay down.
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Insurance: This could be auto insurance if you choose to break it out, but it could also be any insurance you are paying for.
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Personal Care: Haircuts, tanning, massages, nails, and similar activities.
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Leisure: Anything done for entertainment such as dining out, gadgets, alcohol, movies, streaming services, video games, etc.
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Education: Any educational items from tuition to supplies.
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Child Care: Self explanatory.
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Miscellaneous: These are things that you have forgotten to budget for. Items captured here which may be recurring should moved into a new or existing category in the coming months.
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Healthcare: Doctor visits, medications, medical supplies, specialty treatments.
How it Works
We start with your monthly net income as this is the basis for all your spending. You budget will be based on a month to month cycle as most services are billed monthly. Our example budget has some of the categories broken out.
The monthly income is based upon a $30 wage in a 40-hour work week with a deduction rate of 30%. The amounts are simply examples to illustrate how every dollar has a job.
Budget Columns
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Expenses: The areas where you put your money.
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Monthly Amt: The amount allotted to the category for the month. This is your main focus each month.
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Annual Amt: Simply the Monthly Amt multiplied by twelve. This gives you an idea of how much you are allocating in each category for the year based upon your monthly amount.
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Net Pct: The percentage of your net income utilized by the category. This is simply informational.
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Gross Pct: The percentage of your gross income utilized by the category. This is simply informational.
Table 1: An example budget.
|
Gross Monthly Income |
$5,200.00 |
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|
Monthly Net Income |
$3,640.00 |
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|
Annual Net Income |
$43,680.00 |
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|
Expenses |
Monthly Amt |
Annual Amt |
Net Pct |
Gross Pct |
|
Rent |
$1,100.00 |
$13,200.00 |
30.22% |
21.15% |
|
Home Insurance |
$600.00 |
$7,200.00 |
16.48% |
11.54% |
|
Electricity |
$100.00 |
$1,200.00 |
2.75% |
1.92% |
|
Heat (Oil or Gas) |
$100.00 |
$1,200.00 |
2.75% |
1.92% |
|
Internet |
$75.00 |
$900.00 |
2.06% |
1.44% |
|
Mobile Phone |
$30.00 |
$360.00 |
0.82% |
0.58% |
|
Groceries |
$600.00 |
$7,200.00 |
16.48% |
11.54% |
|
Personal Care |
$50.00 |
$600.00 |
1.37% |
0.96% |
|
Healthcare |
$50.00 |
$600.00 |
1.37% |
0.96% |
|
Clothes |
$50.00 |
$600.00 |
1.37% |
0.96% |
|
Auto Insurance |
$125.00 |
$1,500.00 |
3.43% |
2.40% |
|
Car Fuel |
$160.00 |
$1,920.00 |
4.40% |
3.08% |
|
Roadside Assistance |
$12.00 |
$144.00 |
0.33% |
0.23% |
|
Household Goods |
$125.00 |
$1,500.00 |
3.43% |
2.40% |
|
Spending Money |
$100.00 |
$1,200.00 |
2.75% |
1.92% |
|
Savings (General) |
$150.00 |
$1,800.00 |
4.12% |
2.88% |
|
Emergency Fund |
$75.00 |
$900.00 |
2.06% |
1.44% |
|
Expenses Fund |
$118.00 |
$1,416.00 |
3.24% |
2.27% |
|
Travel |
$0.00 |
$0.00 |
0.00% |
0.00% |
|
Gifts |
$0.00 |
$0.00 |
0.00% |
0.00% |
|
Streaming Media |
$20.00 |
$240.00 |
0.55% |
0.38% |
|
Left |
$0.00 |
0.00% |
The last row is labeled “Left.” These fields will display a running tally of your income minus your expenses. This field should not alarm your, but it is helpful to see when your allocation take you over budget. This is helpful as it should help you to change your allocations in some of your non-essential expenses. Remember the point of this tool is to assign your money to cover your expenses and plan for your financial goals.
The budget sheet in the SocietalGlitch Personal Finance Workbook, will allow you to adjust expense names and allocations to help you understand where your money will best serve you. For example, you may find that your are spending way more than you knew in a particular category and may decide to dial that back. At the very least your new budget will serve as a visual tool of awareness.