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Wednesday, September 5, 2007

Damn Gas! *sigh* How to set up a SUCCESSFUL budget

I am only 5 days into the month and I have already spent $55.02 on gas. And I budgeted $90 for the entire month. UGH!!!

Needless to say, my assumption that 90 bucks would be enough for gas when I drive @ least 120 miles a day just on work will have me looking like an ass when I do my end-of-the-month analysis.

I looked over how much I have spent on gas in the past few months (something I should have done from the get-go) and I averaged about $180 a month. OMG!!! Double than what I budgeted.

All my dang on fault! I blindly threw a number in for my gas budget and thought I would nail it. WRONG!! This just shows how NOT easy it is to develop a budget. Obviously Dimples doesn't fully understand the concept of creating a budget. A SUCCESSFUL budget. So I did some research and found the following article. I wonder if I should recalculate my budget. Its early in the month. I dunno why but it feels like it would be cheating. Aww well. I'll just roll with it for this month and just learn my lesson come October. And for those who are wondering, gas is the only category I messed up on. Everything else is pretty much fixed or based on averages.

How to Set Up a Successful Budget

Setting up a budget that will work for you is the first step in Financial Planning. Here's how to do it right.

Difficulty Level: Average Time Required: 1 to 3 hours

Here's How:
  1. Start with a canned budget worksheet (see link below).
  2. Go through your check book or bills for the last two to three months and add and delete categories from the worksheet to fit your expenditures.
  3. Think about your hobbies and your habits and be sure to add categories for these expenses.
  4. Go through your pay stubs and calculate your average monthly gross pay.
  5. Do the same for any interest income, dividends, bonuses, or other miscellaneous income.
  6. For each expense category, try to determine a budget amount that realistically reflects your actual expenses while setting targeted spending levels that will enable you to save money.
  7. Once you're comfortable with your expense categories and budgeted amounts, enter expenditures from your checkbook from the last month.
  8. Keep track of cash expenditures throughout the month and total and categorize these at the end of each month.
  9. Subtotal the income and expense categories.
  10. Subtract the total expenses from the total income to arrive at your net income.
  11. If the number is negative, your expenses are greater than your income. Your situation can probably be greatly improved by changing your spending habits.
  12. If you have a positive net income, transfer most of it to a savings or investment account at the end of each month. Extra cash left in a regular checking account has a way of getting spent.
  13. After you've tracked your actual spending for a month or two, analyze your spending to identify where you can comfortably make cuts.
  14. Once you've got the budgeting process in place, take an in-depth look at your largest spending categories, brainstorm about ways to reduce spending in specific categories, and set realistic goals
  15. Update your budget and expenses monthly.
  1. Don't try to fit your expenses into somebody else's budget categories. Tailor the categories to fit your own situation.
  2. Make your categories detailed enough to provide useful information, but not so detailed that you become bogged down in trivial details.
  3. Think of your budget as a tool to help you get out of debt and save money, not as a financial diet.


Dream said...

Have you been keeping a spending journal? Doing that for a while is what helped me get a good idea of how much to budget. That's not to say that I still don't go over though, lol.

SavingDiva said...

Thanks for the article! I think you know that my budget is a MESS! It could definitely using some revision...

aynekat said...

Hey Hun,

Very good post, I need to be posting on mines, but anyway let me tell you how I did mines. I have monthly bills like everyone else and it is set in stone, Brighthouse consists on the phone, internet and cable, the electric bill has a range that pretty much I can round to 100 and be okay, my cell phone bill is the same and my rent is the same. Now on to the credit card debt, I have them set up on monthly payments except for one that is biweekly, I also have my biweekly auto payment. These are the bills that I use in my budget because that is what I have and that is what I know is not going to change. NOW! with the extra money, I put in a savings acct, investment acct and emergency fund and I use those accts for gas, groceries and everything else that I need. When you create a budget you don't want to overdo it and create all these expenses that you can compact into one fund, it makes budgeting much harder (in my experience). I also created on my budget list an unexpected expense category for those I have no control over and it helps when I have those accounts with money already in there that I can just move over or adjust to whatever the unexpected cost is. I hope this helps you, if not I would be glad to help you create a budget for.

Luv ya!

aynekat said...

okay, I just re read my post and on some parts I sound dislexic ( I hope that is how you spell it), I am a little tired so I hope you understand what I am trying to say.


Single Ma said...

Budgets are the debil! LOL

Tired of being broke said...

LMAO at budgets being the true.

I save first via direct deposit, pay bills and that is it. That is my budget.