How to Make a Personal Budget

Anybody can create a budget. Making one you can live with is the challenge.

You will need

  • Spending journal
  • Resolve
  • Sacrifice
  • Willpower
  • Personal finance software
  • A Christmas club bank account

Step 1 Track expenses For one month, write down every single cash purchase that you make.

Step 2 Review finances With the help of your spending journal and your credit card and/or debit card statements, tally up how much you spent the past month. Then subtract it from your monthly net income.

Step 3 List debts List any debts you have.

Step 4 Analyze spending If you are spending more than you earn, see where you can cut back. Keep trimming until you’ve figured out an amount you can afford to spend each month on nonessential items like new clothes and dinners out.

Step 5 Include seasonal expenses Tally up as many annual expenses as you can (holidays gifts, a summer vacation, birthday presents); divide by 12 and add them under ‘Miscellaneous.’

Step 6 Make adjustments Review your budget every month and adjust it if necessary, even if that means allocating more to expenses and less to savings and/or debt than you’d hoped. You need to keep it realistic, or it won’t work.

Step 7 Be realistic Be realistic about sticking to your budget. Like a diet, a budget is meant to be blown once in a while. Just don’t use it as an excuse to ditch it altogether.