Are you trying to set yourself up on a budget so that your financial life is easier for you to manage? Do you want to know where your money needs to go each month so that you can plan correctly and take care of all your expenses? There are a few different theories when it comes to how to write a budget, but there is only one way to make sure you are not surprised by expenses you do not think about. Here is the correct way to write your budget.

You need to start with all of your expenses. This means you need to get a list of everything from your utility bills, mortgage or rent, car payment, insurance, to your license fees, car registration, oil changes, Christmas spending, birthday spending, and everything else in between. Anything that you spend money on in a years time needs to be included in your budget. If you forget about the quarterly or annual expenses you will be surprised by them and it will throw your budget off.

Next, you need to weigh your expenses against your income. Break any expenses that are not monthly down into monthly expenses to make it easier to work with. Then, you need to add them all up and subtract them from your income. The amount you have left is what you are allowed for savings, entertainment, and other things that are not necessities for your survival.

If you are not happy with the amount that is left over, then it is time to look at your expenses closely and figure out what you can live without. You might have cable television just so you can watch one show a week. Maybe that show is offered on the internet for free. Maybe you barely ever watch your television and that is an expense you can throw out. There are many other needless expenses that are usually in our budgets. Take a close look and eliminate anything that is not necessary for you.

Last, you need to figure out how much you are willing to waste on entertainment each month. This is your nights out, your movie rentals, and other things we do for enjoyment. There are many ways to make cuts here and still have a great time. You also need to figure out how much to save for general savings, vacations, emergencies, and other things you might be saving money for. This is how to write a budget the correct way and make sure you do not leave anything out.

Making a household budget may seem like a chore. An unreasonable and unnecessary addition to your already long list of duties. But the benefits of making a household budget greatly outweigh any disadvantages of having to do so. Here is why.

Have you ever received a letter from the bank telling you that your account is overdrawn? The charges incurred from the overdraft can be amazing. Most banks charge on average $35 for each item that is overdrawn. Making a household budget can save you lots of money in overdraft charges.

For example, if have gone over and you have five checks that come through you will be charged $35 times five which equals $175. Ouch!! Now most times the reason you go over is because you had more money going out than you did coming in and that $175 is going to cause even more problems.

This is the main reason why making a household budget is needed. A budget will help you to have a better understanding of your money. It will show you where it goes and it will help you to eliminate the overdraft fees and headaches.

Making a household budget doesn’t have to be difficult. I recommend you start out with one month. When you try to do more than that, you will build stress and you don’t need that.

Start out by collecting all of your monthly bills and your check book. You will need several pieces of paper and a pencil. Blank paper with no lines would work better, but any type of paper will work.

Write out all of your monthly bills, amount due, and due date. Here are some examples of monthly bills that are important when making a household budget:

Mortgage
Electric
Water
Insurance
Gasoline
Credit card
Groceries
Internet
Phone
Car payment

Once you have the monthly bills, amounts, and due dates you are ready to add the miscellaneous items. These items include the following.

Clothing
Vehicle Repair
Movie rentals
Entertainment

These things are ones that you could remove or do without if you had to, due to the money going to something else. These could also be one time items like registration fees for a sport or a birthday gift. You are almost down making your household budget.

Now you need to add all of these items up and add them to a different piece of paper. Add your income to the sheet as well. Now subtract your income from the amount of your bills. If you are in the black you are off to a great start, but if you are in the red, you need to reevaluate what you are spending your money on each month. You don’t want to live pay check to pay check and spend every last dime. You will want to have a cushion in your checking account just in case something happens.

Part of making a household budget is writing down the dollar amounts and what it was for, for every purchase you make. You need to do this with every purchase because you want to know where your money is going. You may have more than enough funds to cover your monthly bills but still have nothing in your account or over draw it. When you write down all of your purchases you will be able to figure out where the problem areas are and you will be able to fix them.

Making a household budget will help you to have more money each month and it will help you save for the future. Its also a great way to show you children show your children responsibility. Be sure to include them when making your household budget so that they will learn how to do it with their own money as well.