How to Write a Personal Budget

A personal budget is merely a short-term financial plan, where you designate what happens to your money in any given month. Experts in goal setting will say that the single most effective step to achieving any given goal is to write it down. Therefore, a budget is simply how one writes down the financial goals for the current month.

	At the top of the page write down the amounts of all paychecks and other income for the upcoming month. Only the take-home (after-tax) pay is important, since that's all you have to work with. (The techniques for dealing with variable income are dealt with in other articles.)
	Sum up all the paychecks and other income. That is the total amount you have to work with.
	Write down your projected monthly expenses by category with one category per line. The first column should be the expense category. The second column should be the amount given to that category. And the third column should be how much money you have remaining. It is advantageous to put higher priority categories closer to the top.
	Continue to allocate the money until there is no money left. If you find that there is not enough money, you will have to reduce spending in some categories. If you find that there is extra money, then you should plan to do something with it - otherwise it will probably be spent unwisely and disappear. Consider putting it in savings, using it to pay down the mortgage, etc. Here is a simplified sample budget following this pattern. Paycheck 1: $1500 Paycheck 2: $1500 Total pay: $3000 Giving - $300 - $2700 Food - $350 - $2350 Mortgage - $700 - $1650 Electricity - $80 - $1570 Water - $40 - $1530 Gasoline - $150 - $1380 Clothing - $60 - $1320 Internet and cable - $70 - $1250 Telephones - $50 - $1200 Automobile insurance - $100 - $1100 Roth IRA contribution - $300 - $800 Life insurance - $30 - $770 Entertainment - $40 - $730 Car repairs - $100 - $630 Saving for next summer vacation - $100 - $530 Saving for upcoming Christmas - $70 - $460 New gas grill - $200 - $260 Ted's birthday present - $20 - $240 New hard drive and graphics card - $240 - $0