Budgeting Tips:

We all know how important it is to have a budget when it comes to managing money. By having a realistic budget you are able to control expenses, save for the unexpected, and plan for large purchases such as a house or a car.

Most people think that living on a budget is difficult. But creating a budget can be easy and fun. Sticking to the budget is not difficult if you prepare it right. Below are 5 easy steps for creating a budget.

Step 1: Determine how much money you receive on a monthly basis.* The following calculations may help:

• If you are paid hourly:

• If you are paid the same amount weekly:

• If you are paid the same every other week:

• If you are paid the same twice a month:

*Don't forget to include additional income from child support, alimony, a part-time job, investments, Social Security, pension, or over-time (if you regularly work over-time).

Step 2: Determine your known monthly expenses. These are expenses that are usually the same each month. They should include the following:

• Housing expense (mortgage or rent payment)

• Transportation (car payment or bus fare)

• Loans (personal loans, student loans, etc.)

• Credit Cards

• Utilities
  - Electricity
  - Gas
  - Phone
  - Cell Phone
  - Home Alarm System

• Recurring Payments
  - Gym membership

• Insurance
  - Homeowner's (if not included with your mortgage payment)
  - Automobile
  - Life
  - Health

Step 3: Determine your additional expenses. These are expenses you have each month or almost each month, but the amounts vary. You may need to estimate these expenses based on the last few months or year. You may also want to set goals for how much you want to spend monthly for each category so you don't spend more than you can afford. Examples of these types of expenses are:

• Car Maintenance:
  - Gas
  - Repairs
  - Oil changes

• Home Maintenance:
  - Lawn care
  - Pest control

• Medical/Dental Expenses

• Groceries

• Dining Out

• Savings

• Donations
  - Charity
  - Church

This is the income left over after your expenses. This is what can be used for irregular expenses such as entertainment, clothing, gifts, or miscellaneous purchases.

Step 5: Review your budget monthly to determine if it is realistic. You may find that some of your estimates of variable expenses are set too high or too low. If you are constantly over budget on variable expenses, determine if the budget or your spending habits need to be modified. If it is your spending habits, set a goal for how much you would like to spend and stick to that amount. For example, if you want to lower your dining out expense, set a goal for how many times a month you can afford to eat out and stay within budget. Each time you eat out, track the amount you spent to make sure you do not go over budget.

Tips:
You may have additional expenses that will need to be factored into the fixed or variable categories.

If you have difficulty saving, consider it a fixed expense like a bill. Consider having it drafted out of your checking account automatically so you don't use if for a miscellaneous expense.

Many financial experts recommend having 2-3 months worth of your monthly expenses in a savings account that can be accessed at any time in case of an emergency. Additional savings should be deposited in an account that is for long term growth such as a certificate of deposit or mutual fund.

There are many software programs such as MS Money or Quicken which will help you design a custom budget to meet your needs.

Reward yourself every few months for sticking to your budget by having a nice dinner out or something else that will make you feel pampered. (Just make sure you can afford it.)