Establish A Household Budget
By Ross Kostecky
If it seems like you have no idea where your money is going and you end up living paycheck to paycheck, and you are slowly sliding into red ink, establishing a household budget is the first step for you to take control of your personal finances.
Grabbing a piece of paper and pen is an old-fashioned method to keep accurate track of your money, instead, you can easily establish a household budget using Microsoft’s Excel program.
Start Excel and begin by titling your worksheet “Household Budget” in the upper left A1 cell.
Label cell 2A as “Total Monthly Gross Income.” Enter the dollar amount for income in column C, 3D. Under gross income, we you will account for your check deductions, “Taxes, Health Insurance, Miscellaneous Payroll Deductions.” Account for all deductions from your check in column B, 2B. Next account for positive deductions from your check, meaning “Savings, 401K deductions” in cell 3B. This setup will allow you to easily calculate the “Net Monthly Income” which you can note in the cell under “Savings.”
Next we will budget for “Housing Expenses.” Using the same format as the income section of the household budget, create a row for each of the following housing-related expense: Rent or Mortgage, Utilities – Gas and Electric, Cable, Internet, Insurance, Repairs, Taxes, and Miscellaneous. Make sure to include a row in this section for a Total.
Next is monitoring “Transportation Expenses.” For this section the row titles should be: Loan/Lease Payment, Gas, Insurance, Maintenance/Repairs, Parking, and Miscellaneous. Again create a Total row.
Next, the all-important “Debt” section. it’s time to account for all outstanding debts owed to creditors. Make sure to label the specific name of the creditor and the total balance owed. In the next column to the right, note the amount you paid for the month. In the next column to the right, note the total amount you have paid thus far. In the next column to the right, note the total amount owed. Do this for each creditor who you owed money to. And, note the Total amount paid for the month toward your debt.
Next is a “Miscellaneous” section. In this section you can keep track of all other expenses paid during the month, including: Food/Groceries, Dining, Childcare, Medical Bills/Co-pays, Prescription Medication, Pet Supplies, Fitness/Gym Memberships, Club/Organization Dues, Newspaper/Magazine Subscriptions, Clothing/Apparel, Haircut/Salon, Gifts, and Church/Charitable Contributions. Total the amount spent on miscellaneous items in the final line of this section.
Nest, we will keep track of your “Savings.” If you are able to or force yourself to put a few dollars in a savings account, keep note of it here.
Finally, in this section, “Monthly Expense Totals, you can add all of the expense sections. Sum the Housing, Transportation, Debt, Miscellaneous and Savings sections to find the total amount you spend on monthly expenses. Then subtract the total expenses from your “Net Monthly Income.”
Making this final calculation will allow you to determine if you have a monthly surplus or deficit.
A surplus will allow you to save more money on a month-to-month basis, a deficit alerts you to poor or alarming spending habits.
R. Kostecky writes for a personal finance blog, Debt Consolidation Loans. The blog covers ways to help get out of debt, including an in depth look at Credit Counseling.
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