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How To Make A Budget That Works For You
Michalis 'BIG Mike' Kotzakolios

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If you do not know how to make a budget, you could be headed for financial disaster. The goal of making a budget is to ensure that you have enough money for all your necessities. It is to be hoped that there will be money left over for fun and entertainment. Many factors are included in making a budget. Income, expenses, and even the price of gasoline can impact your budget making process. Here are some tips to help you make a budget.

A budget is simple accounting. The money you earn must equal or exceed the money you pay for bills. That sounds simple enough, but there are plenty of surprise expenses that can break your budget if you don't plan for them. A spreadsheet or other type of budget software is helpful in setting up your budget. This will allow you to quickly see how your budget changes as your income or payments change.

Determining your income is the first step in how to make your budget. If your job is your only source of income, look at your paycheck. Your income is the actual amount of the check, not the biggest number shown on the check. The biggest amount on the check is your gross income, which means no taxes have been deducted yet. Your net income, which you will use in making your budget, is the gross income minus all taxes and other payroll deductions. If you have other income sources such as a second job, child support, or alimony, these count as income too. Add all these income sources together.

The next step in how to make your budget is determining your expenses. This is harder than it sounds. The amount surprises many people. Make a list of every bill and expense you pay on a regular basis. These expenses include rent, mortgage, utilities, car insurance, home insurance, groceries, gasoline, parking fees, and even pet expenses. Use your checkbook register to help you remember the bills you pay. Some of these expenses change monthly, such as utility bills and credit card payments. Use an average or best guess for these. Add all these expenses together.

Now all you have to do is compare the income to the expenses. If the income is larger than the expenses, your budget is balanced. If the expenses are bigger, you need to eliminate some of the expenses until you balance the budget you made. This tutorial on how to make budgets is your preliminary budget estimate. To make a true budget, you need to track income and expenses on a daily basis.

A budget tells you your financial health at any given time. Get in the habit of writing down your income and expenses as they occur, and the task of how to make a budget will become second nature to you.

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