Setting up a budget

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If you are a struggling web entrepreneur that need to turn every coin to survive, this guide how to set up a budget might help you get som structure in your personal finances.

Here are a few tips for easy budgeting.

1.Keep it simple
The thing a person must do to get started is to make a list of your monthly income, or your salary in short, and your expenses. Just stick with expenses that you can easily quantify. For example, the mortgage, car loan, credit card minimums, groceries. As the months and days pass by you can always add more detail.

2.Determine your “real” monthly income
To have a real and authentic budget you have to determine how much you will actually be taking home after all the taxes have been subtracted. In addition to this, you might have extra income. A part-time job, a weekend gig, alimony, child support, etc. You will definitely want to add this to your total.

3.Expenses
This is actually the tricky part. As you probably will notice, you always have more expenses than income. There are always more items on the ‘to spend’ list than the ‘income’ list. You also may have hidden expenses. Just be sure to always keep your monthly list updates so as to always have the right figure to subtract from your monthly take home pay.

4.Keep accurate records and match monthly expenses with monthly revenue
You need to always make sure that the amount of money spent is reflected within the proper time frame. Do not list an expense as being paid on the month that you paid but rather based on the month where the expense occurred. For example, you get your regular electric bill on the 28th of the month in question but are not due for payment until the 3rd of the next month. Say in June you paid on the 28th and in July you paid on the 3rd of August. That would mean that you would not have an electricity expense for July. This would make your monthly income inaccurate. And accuracy in terms of balances is always important in keeping a balanced budget.

5.Estimate big expenses
This is the easy part actually. After a month or two you can more or less gauge how much you will be spending on food or power and these figures you set aside. These are the big estimates with which you work your other expenses around.

6.Keep track of your expenses
Coupled with estimating expenses and having an accurate picture of the amount of money your really have every month, you must also track how much money you actually spend. This is easy for the big stuff. The challenge will be keeping track of the little expenses like Starbucks coffee, the latest Harry Potter book, or a night out with friends. And again, this all boils down to accuracy.

In the end, these 6 simple tips will give you a better way to plan the money you earn, making it possible for you to spend on some things you want and enjoy without sacrificing the things you need to survive. And, hopefully, this way you’ll save a little as well.

February 23, 2007 | Filed Under Tips