Congratulations, you have decided to put yourself on a budget, good for you!

What you’ll need:

  • Paper
  • Pencil
  • Calculator (if you don’t like simple math)
  • Your latest bank statements
  • Your latest credit card statements
  • Your last months pay stubs.
    1. Divide the paper into four columns
    2. In the first column, list all your sources of income in a month, and date the weeks it comes in, so if you got paid today, you would put [June 29 $456.78] for example, with all the other paychecks before it.
    3. In the second column, list all of your expenses, look at your bank statements, and credit card statements, and also your checkbook, categorize them generally (keep it under 15-20 categories if you can.
    1. In column 3 figure out how much you will be paid each week in July by putting adding up the june paychecks and dividing by the total number of paychecks, so $675, $320, $500 would average to $498.33 to help provide some cusion though, I always round down to the ten dollar spot, so I would put $490 for each week.
    2. Column 4 is all about spending, it’s just like column 2 except that it helps to round up to the nearest dollar for extra cusion so $4.99 and $4.01 would both round up to $5.00
    3. Once again do income minus expenses to see how well you’ll do in July
    4. Now use that eraser, and start tweaking the numbers in column 4 until you have a positive outcome.  You now know how much you can afford to spend in July.

    • Here are the basic steps you will need to follow:

    You don’t have a budget yet, but now you have an accurate picture of what you’ve spent this past month.  Total Columns 1 and 2, then subtract column 2 from column 1.  If it is a positive number, congratulations you have been doing a good job of spending less than you earn, the key to becoming wealthy.  If it is a negative number (mine was) it is time to separate the wants from the needs, we’ll discuss this in a future article.

    Now we take our June Spending picture and use it as a guide for our July Budget:

    It may take an hour when you do your first one, but sometimes that hour can show you over $500 in expenses that you can totally do away with, so, in a sense 1 hours work earns you $500 a month.