Education is Essential

6 Easy Steps for Creating a Budget

Not everyone budgets for the same reasons. For some, it’s to save for something they’ve had their eye on and for others it’s just to be sure they are spending within their means and their funds are allocated appropriately.

Come the first of the month when bills are rolling in, do you know how much money you truly need and how much of it is disposable income that can be used for fun?

Here’s how to create your budget, courtesy of Essential Federal Credit Union:

  1. First things first, list all of your monthly expenses. It’s easiest to categorize into larger groups and then break your expenses out from there.  List your expenses under Essentials or Other. Essentials include Rent/Mortgage, Utilities, Insurance, Loan Payments, groceries, etc.  Other includes clothes, gas, extra-curricular, gifts, eating out, etc.
  2. Add each column up.
  3. Determine your monthly net-income.  This is the amount you actually receive in hand.
  4. Subtract your Essentials from your Income.  Then subtract the Other from the remaining amount.
  5. By looking at the numbers, you can easily determine what expenses you may need to decrease. While you may deem cable an essential, perhaps that cable bill can be reduced by canceling HBO, HD or cable boxes that are rarely used in unfrequented bedrooms.
  6. With any remaining money, you may want to look into putting it into a savings account or making extra payments toward loans so you can get out of debt faster.