Budgeting

Unit 2: Evaluating Income and Expenses 

Now it’s time to evaluate your spending patterns to determine if you’re overspending or managing your income and expenses. 

Step 2: Evaluate Income-Expenses

  • Total your monthly income and monthly expenses. If your income exceeds expenses you are off to a good start. You can prioritize this excess to areas of your budget such as retirement savings or paying more on credit cards to eliminate debt faster. If your expenses are higher than your income it means changes will have to be made.
  • Make adjustments to expenses.  If you are in a situation where expenses are higher than income you should look at your variable expenses to find areas to cut.
  • Review your budget monthly. Review your budget on a regular basis to make sure you are staying on track. After the first month take a minute to sit down and compare the actual expenses versus what you had created in the budget. This will show you where you did well and where you may need to improve. 

Download PDF: Setting Up A Budget - Part 1

Download PDF: Setting Up A Budget - Part 2

Step 3: Tracking Expenses

Tracking your expenses is one of the key factors in making your budget work for you. If you do not know how much you have spent each month, how can you tell when you have overspent? 

  • First, you will need to have your budget with you. Using a notebook or piece of paper write down each budget category at the top of the column. Then you need to record the assigned amount next to it.
  • Next, you will need to take time each day to record your expenses. As you record each expense in a category, you will need to keep a running total of how much you have left in that category. Simply subtract the amount you spent from the current total and record the answer.
  • Finally, you will need to stop spending when you see that you are out of money. You may find that your budget is unrealistic or you may need to transfer money between categories. Take the time towards the end of the month to adjust next month's budget so that will work for you.

Download PDF: Where Money Goes

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