Preparing your first budget

Some people think a budget is a rigid plan on how you can spend your money. A better way to think of it may be as "household spending analysis." It doesn't sound so tedious and it better implies how you can use it to gain control of spending and build a solid financial foundation

Why is it important?

Generally, a spending analysis will help you understand where your money comes from and where it goes. With that understanding, you can make informed financial decisions, monitor your spending, and save more.

Components of a spending analysis

The chart below is just one example of how to start tracking your monthly expenses. Put in your current expenses and add it up. If the amount you're spending is more than your income, you know you'll need to reduce spending right away.

In the "Goal" column, list the amount you want to spend on each category and work toward that. Things like rent and insurance are probably set. Other expenses, like food, entertainment, and gifts are more easily changed. After a few months you should have a good understanding of what your fixed expenses are and where you can save.

Choosing and using a budgeting method that works for you will give you the peace of mind that comes from being in control. You can also use our budgeting calculator and there are many other tools available online for free.

Monthly household spending worksheet

Monthly Expenses

Current

Goal

Comments or Observations

Monthly Savings $ $  
       
Housing Expenses      
Mortgage payments or rent $ $  
Property taxes $ $  
Maintenance or repairs $ $  
Utilities (gas/water/electricity) $ $  
Telephone/cable/internet $ $  
Housekeeping, laundry $ $  
Other $ $  
       
Transportation Expenses      
Car loan or lease payments $ $  
Fuel, maintenance, repairs $ $  
Auto insurance $ $  
Public transportation $ $  
Other $ $  
       
Food & Entertainment Expenses      
Groceries $ $  
Restaurants $ $  
Sports, hobbies, pastimes $ $  
Books, magazines $ $  
TV/Cable/Satellite $ $  
Vacations $ $  
Other $ $  
       
Health Care Expenses      
Doctors, dentists, etc. $ $  
Prescriptions $ $  
Health insurance $ $  
Other $ $  
       
Family Expenses      
Schools, colleges $ $  
Child care $ $  
Alimony and child support $ $  
Other $ $  
       
Other Expenses      
Clothing, shoes, etc $ $  
Charitable contributions $ $  
Gifts, birthdays, holidays $ $  
Pets, veterinarian expenses $ $  
Paying off debts or credit cards $ $  
Life and disability insurance $ $  
Rainy day funds $ $  
Other $ $  
       
TOTAL EXPENSES: $ $  
TOTAL MONTHLY INCOME: $ $  
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