How to Make a Budget

A budget lists all the money you can count on as income and all of your regular expenses. It lets you know how you will spend your money on your living expenses, such as rent, food, household bills, and entertainment.

The goal of a budget is to help you balance your monthly expenses and the amount of money you take in during that time. Making a budget and sticking to it can give you peace of mind.

Here are the basic steps for making a budget:

1. Write down how much money you can expect in a given month. Remember to use the “net” amount from your paycheck. This is the amount of money you get after taxes, retirement savings, and any flexible savings account dollars are taken out.

2. Write down all of your monthly bills and how much they are for. Be sure to include your rent or mortgage, electricity, gas or heating oil, water/sewage, insurance, cell phone, land line, cable/internet, and any debts you have, such as credit cards, loans (including car loans), or court-ordered judgments. Write down which are fixed bills. These are the bills that are the same every month, such as your rent. Also write down which are variable bills. These are bills that can change every month, such as a credit card bill.

3. Subtract the amounts that you have to pay for your bills from the amount of money you have coming in.

4. The amount that is left over can be used for expenses that are in your control. One of the biggest expenses to come out of this money will be food from the grocery store. Divide up the remaining amount to cover other expenses, like going to the movies, gifts, and other items. If possible, decide on an amount that you will set aside for savings.

5. Also track daily spending. Write down how much money you spend every day on things like coffee or snacks.

A sample budget

Here’s a general example of a month’s budget:

Total Income	$2,400
Rent	$900
Electricity	$250
Water/Trash	$80
Gas (car)	$160
Food	$600
Credit cards	$80
Phone	$80
Cable	$110
Balance	$140

In this budget, $140 is left over at the end of the month once all other usual expenses are paid. You’ll need to spend some of that money on clothing and household items, but you should try to open a savings account to save up for unexpected expenses or the loss of a job. The goal for savings should be at least 3 months’ worth of living expenses. Some people feel more comfortable if they can save enough money to live on for a year. If your job offers a retirement plan or an automatic savings plan, take advantage of it. It’s easier to save if you have the money taken out of your paycheck automatically.

Look for ways to cut back

Making a budget can be a painful reality check. You might find that you need more money at the end of the month than you planned for. One option is to take another job or do side jobs in your free time. If you have an extra room, you might consider taking in a roommate (just be sure to get the person’s permission to first run a criminal and credit background check for your own safety).

You can also look for ways to cut back on your expenses:

• Turn off lights when you aren’t at home or in a room.

• Don’t use the AC or heat as much; wear layers and bundle up in the winter.

• Get a low-cost cell phone plan and don’t use more minutes or texts than allowed.

• Clip coupons and check the Internet to save on grocery costs.

• Talk with utilities and phone companies about reduced-cost or cost-sharing programs for low-income families.

• Cook at home whenever possible rather than eating out.

• Talk with your children’s or grandchildren’s school district to find out about free or reduced-price lunch and breakfast options.

• Make a list when you grocery shop and stick to it. This will keep you from spending more than you planned.

Look for ways to get help

A number of organizations will help you if money is so tight that you find you’re cutting back on essentials, such as food or medicine. Here are some places to start:

• WIC: Supplemental Nutrition for Women, Infants, and Children . WIC supplies mothers and children up to age 5 with access to nutritious foods, such as milk, eggs, cheese, cereal, dried or canned beans, fruits and vegetables, and whole-grain flour. It may also distribute coupons to use in local farmers’ markets and offer referrals for free or low-cost healthcare.

• TEFAP: The Emergency Food Assistance Program for eligible low-income families. This food, distributed by the USDA, is available at no cost at soup kitchens and many community agencies.

• SNAP: Supplemental Nutrition Assistance Program (800-221-5689). In 2008, SNAP replaced the former federal food stamp program. It offers monthly benefits to eligible low-income families, including an electronic card (similar to a bank card) that can be used to buy nutritious food.

• Food Banks. Look for groups in your area that provide basic food and supplies, such as diapers and toilet paper, to eligible families. Some food banks also serve free nutritious summer meals daily to all children 18 and under. Others offer free clothing as well.