If you never learned how to do a budget in school.. a Primer

[SoCalDem]

In case there are people who never had an opportunity to learn.. here's an easy way to do one

First, be sure you SAVE all your bills, so you can get an average..


Here's what I taught my kids about budgeting

Use the same bill each month as the "wrapper", to keep all the month's paid bills inside it.

Write the check# and date & amount on the part you save, so you can easily locate it if you need to.

Rubber band each bundle monthly..

For instance:

Whatever your previous year's electric bills were..add 'em up & add 15%..then divide by 12..
repeat for all your recurring bills

A legal pad is plenty..but you could use excel on your computer or you could spend money for Quicken

Just add up the 1/12th portion for all your fixed bills (list them)

Don't bother figuring in some things.. like entertainment/clothes etc

We're after basics to start with..

Now list the NET (what your actual check is) x 4

(I know some months have an extra payday..but 4 a month (or 2 ) is the basis I use..

Subtract the TOTAL for your fixed bills..

Fixed bills are:

rent/mortgage
water
car payment
student loans
gas
elec
phone
insurance(s)
cable
internet
child care
child support/alimony
trash pickup


What you have left over is your discretionary income

What is discretionary income?

It's money you CAN adjust.

You can drive less to save on gasoline
You can eat out less
You can buy cheaper food
You can eliminate entertainment spending

Whatever's left over, divide into fourths.. That's what you have to spend each week. for EVERYTHING...

You'll notice that there is nothing in the list so far for savings or food or gasoline or car repairs or emergencies.

If you have a car, you can be assured that something WILL go wrong with the car from time to time, so it's always a good idea to put at least $50 a month into a separate savings account, so that you will have it if you need it.. If you are lucky and nothing happens, then you just have extra money,.

there is also nothing in the budget for credit card payments. If you have them, list them by the HIGHEST interest first..PAY THEM OFF FIRST...and put the cards away.. Do NOT carry them with you , and you'll cut down on impulse buying.. That 25% off sale is useless if you pay 18% interest and carry a balance..

Round UP.. If your bill is $75.65..(and you can afford it) pay $100..

It's nice to get a statement showing that you have a credit and do not owe.. especially if that month happens to be Nov or Dec

If your bills add up to more than you bring in, then you need to start cutting stuff out or get an additional job that's ONLY to pay down debt..DO NOT USE THAT EXTRA MONEY FOR ANYTHING ELSE, OR YOU'LL NEVER BE ABLE TO QUIT IT..AND THEN MIGHT NEED A THIRD JOB

If you ever have a dispute on a bill, write down the name of the person you spoke with, the date you spoke to them, the time..and notes about your conversation.. It usually takes a few calls to get things straightened out... and if they know you are paying close attention, you will get faster resolution of your problem.

Check the DUE DATE of each bill..every month.. They are changing the dates all the time now, and you don't want to pay a late charge larger than your bill..

If you pay by mail and do not pay them as you get them, subrtact 4-5 days from the due date and write that date on the envelope where the stamp goes....Put them in order,, first due-to last..


Got any other tips for the folks who are strggling with how to do a budget??

Add them on :)