Have you ever wondered,
"Where did my money go?" A good way to understand how you spend your money is
to develop a budget for your household (includes you, your partner and
children). Adding and subtracting is all the math you'll need.
Here's how you can create a budget in three easy steps:
Step 1: Calculate your monthly household
income. Monthly income includes:
What's left of your paycheck AFTER taxes and
deductions. Deductions may include insurance and retirement plan
contributions, among other things.
Cash benefits from Social Security payments, temporary
assistance for needy families (TANF), and other public assistance programs.
Additional earnings from alimony payments, a part-time
job, or other income sources.
Step 2: Calculate your monthly household
An easy way to track expenses without trying to remember
what you bought or locating last month's receipts is to keep a spending
journal. In the journal, write down every purchase you make or bill you
pay for one month. At the end of the month, calculate the total amount
you spent. You should organize your spending into two categories:
Fixed expenses (expenses that you must
pay each month), such as rent, car payments, heat, etc.
Flexible expenses (expenses that
change month to month), such as entertainment, clothing, food, etc.
Step 3: Subtract total expenses from total
If you have money left over, consider saving it in
a bank account
If your expenses are greater than your income, you'll
need to determine how you can reduce expenses or increase income.