How to Develop a Monthly Budget
Making a monthly spending plan can help you to assess where your money is going, but it can also help you to budget and see areas where you are spending too much money.
Here is how to develop a monthly budget.
You will need to start by calculating how much money you expect to make for the month after you have paid your taxes.
Your Monthly Expenses
Create a list that includes all of your regular monthly expenses and include items like eating out, hobbies and minimum payments that go towards debt.
Earnings Minus Monthly Expenses
You will need to subtract your expenses from your earnings. The figure that you have left is the amount that you can expect to have once you have covered all your regular monthly expenses.
Subtract Extra Expenses
Have a look at your plans for the upcoming month and note down any extra expenses that you are likely to have. These extra expenses can include medical bills, repairs, gifts, parties, meals out and so on. These will need to be subtracted from your remaining money.
Create a Cushion
Take a look at the money that you think you will have left over once all anticipated expenses have been covered. Determine if the remaining amount you have left is enough cushion to pay for any unexpected expenses. It is a good rule to allocate 10% towards a cushion.
If the budget comes out on the negative side of things then you will need to look at your monthly expenses again and find areas where you are able to make cuts. Carry on reworking your budget until it works.
If you have any remaining money then it should be put towards paying down debts or to build your savings.
Each month will be different, so it is a good idea to create a spending plan at the start of each month.