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A personal or household budget is an itemized list of expected income and expenses that helps you to plan for how your money will be spent or saved as well as track your actual spending habits. Though the word budget has taken on a more negative connotation over the years invoking an image of pinching pennies or limited spending, a budget is really just a tool – and a great tool at that – to gain better and more accurate insight into your spending habits.

By listing all of your sources of income against all of your monthly expenditures (from required expenses like mortgage or rent payments to discretionary spending like eating out or going to the movies), you get a true picture of your personal cash flow, which will allow you to make better and more informed financial decisions.

An accurate budget will also help you to answer that ever elusive question, “Can I afford it?”

How to Use Your Monthly Budget Worksheet

Below is a worksheet that attempts to list possible sources of monthly income as well as expenses. As everyone’s financial situation is different, you may find that not every category is applicable to your income or spending. You may even find that some months are different than others, but you should find through going through this exercise you are better prepared for those changes and even accounting for unanticipated expenses.

Though a monthly budget is generally the most reasonable timeframe for which to set up an initial personal or household budget, there are many sources of income and expenses that do not perfectly follow a monthly schedule.

For instance, you may receive a paycheck every week or two weeks, not once a month. In that case, you will want to calculate how that adds up over one month’s time and write that in the appropriate row and column. You may also have certain expected or even recurring expenses that occur more or less often than monthly.

To account for those expenses (like car insurance) in your monthly budget, simply calculate the total expense for the calendar year and divide that by 12 in order to find the “monthly” expense. Write that number in the appropriate row and column.

How to Complete Your Monthly Budget Worksheet

To begin, we suggest gathering all relevant financial statements like your pay stubs, credit card bills, and any other information that will inform the best and most accurate estimate of your expected income and spending.

You will first complete the “Monthy Budget Amount” column to the best of your ability for the next month. Theses should be your best, informed estimates. Should a certain category not apply to you, you can simply leave it blank or enter a zero ‘0’ in the box. Over the course of the month, track your income and spending. At the end of the month, complete the “Monthly Actual Amount” column and compare it to your original estimates. Did you overestimate how much you’d spend on clothing, but underestimate the amount you’d spend eating out? Record the difference. Though you do not need to go through this exercise every month, it is extremely helpful at the start as it helps you to develop the most accurate monthly budget to reference moving forward.

You’ve Completed the Budget Worksheet, What Now?

Should you find that at the end of the month that you are consistently spending more than you are bringing in, it might be time to take a closer look at where you’re spending your money and adjust those areas you can to make up the difference. Should you find, on the other hand, that you consistently have money left over every month, you now have the opportunity to decide what to do with that extra cash. Do you need to build up an emergency or “rainy day” fund? Could you be contributing more to your retirement savings? Could you pay certain loans off faster? Or perhaps you would like to save up for a special or large purchase.

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