How to create a budget by kim777

"The difficult part for me was getting my husband as well as myself moving in the same direction. "

How I did it: This took longer than anticipated but we've done it and it seems to be working. Our scrimping and saving here and there has us on the same page now.

Lessons & tips: We used an old budget formula and based it on our current income. Basically you allocate your income:
35% Housing
15% Debt
15% Transportation
25% Other Living Expenses
10% Savings
So using this formula, if your total take home monthly income was $1,000 you would spend your money accordingly:
$350 Housing
$150 Debt
$150 Transportation
$250 Other Living Expenses
$100 Savings

Based on this formula, you know you cannot afford to housing that will cost you more than $350. If your car expenses (i.e. gas, insurance, payment, etc.) are more than $150 you know your are spending too much. You have to commit to living within your means.
The beauty of the savings, is seeing the money begin to accummulate. After you start to see your actions in work, you don't want to slide back into the old habits of not knowing where your money is going. 


9 people found this helpful
 

Sep 22, 2008, 07:28AM PDT | 1 comment | 6 cheers


Comments:

Mike just is.

Congratulations!

Setting up a budget is really difficult to do. If you’re like me, though, once it’s set up, it’s easy to stick to… so long as it’s reasonable! I remember getting really frustrated with a lot of advice on this subject. They always start out with a first step of keeping track of what you spend money on—which is ok— just save receipts and record them in a spreadsheet. The second step was always make a budget that can accommodate your spending. And they never give any examples of what a good budget should look like! Years ago, I stumbled across an article on MSN that at least gave an idea of what to shoot for, called the 60% Solution:

http://articles.moneycentral.msn.com/SavingandDebt/LearnToBudget/ASimplerWayToSaveThe60Solution.aspx

It might not be the best guide for a budget, but at least it’s a start.

Congratulations on setting up a budget—I hope it works well for you!

Sep 22, 2008, 08:35AM PDT | Respond to this


kim777 has gotten 6 cheers on this entry.

 

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