If you’re like me, at the beginning of the year you have all these aspirations of saving money and investing wisely, eating healthier, etc. Whether you want to call them resolutions or goals, it is never too late to set a new goal. If one of your goal is to get a better handle on your finances, I wanted to share some information on planning a monthly budget for your household to gain control of your finances.
A Fresh Start – Planning a Monthly Budget
Whether it is the beginning of January or any day, you can have a fresh start anytime. Most businesses and institutions measure, analyze and publish their financials at the end of the fiscal year. As we gather information for our tax returns, this time of year is a good time to assess financial progress and start planning your monthly budget if you do not have one.
One of the biggest impacts on our ability to save has been the use of a household budget. We have had a budget since our first year of marriage. A few years back, our income decreased significantly almost instantly with the loss of a job. As devastating as it was, we not only were able to amend our budget, but we knew right away which areas to cut to make ends meet.
Determine Your Goals for the Budget
A budget is not just a place to record what you spend. Use it as a tool to set some tangible goals. Maybe you want to save for a new home, car, college, retirement or or a new business. Whatever it is, you will want to keep these goals in mind when setting up a monthly savings deposit.
As far as how much to save, that will depend on how much income you have and your timeline. You should consult a financial professional to help you. According to Forbes magazine, the average American saves 7% of their income.
Using the Budget Planner Template
Below you will find a printable budget planner template to help you list all of your income and expenses. It may seem tedious at first, but it is the only way to see where you stand on income and expenses.
Start filling it out based on your current spending. First, list all of your sources of income. Think of all your income from your job, side hustles, interest earned, babysitting, whatever. Then list your expenses by type.
Fixed versus Variable Expenses
Under expenses, list your expenses such as your rent, mortgage payment, insurance fees, loan payments, groceries, etc.. Separate the fixed expenses (those that are the same each month, like rent, for example) from the variable expenses, such as groceries, clothing and dining. Doing so will help you determine which areas you can cut back on, allowing for more money to be saved or invested. Be sure to include a spending money allowance to be used to support your lifestyle, but remember, that you will want to only spend a portion of your income.
Total your monthly income and expenses and the difference is your spendable income. This is a starting point to determine what monthly amount of money you intend to save toward your goals. Keep in mind, that it is also a good idea to set up an emergency fund so you are prepared for the unexpected. Most recommend 3 -6 months of your salary.
To increase savings, see how much you can stretch yourself to save each month and pay yourself first like an actual bill. If your expenses exceed your income, you need to change something fast. When you have a budget, it enables you to trace where the budget busters are coming from.
I recommend using this printable for a couple of months and see how well you can stay within your budget. If you are over in some areas, analyze whether it was a one time instance or whether you need to increase your budget in that area.
While this budget setting printable will help you get started in setting up your budget, I personally recommend that going forward you use an Excel spreadsheet or Google Sheet so that financial calculations can be easily computed.
Once you complete your budget, keep track of your spending each month and see where you need to adjust. There will always be unexpected (and unwelcome) expenses. It is just how life is, but by planning ahead and using a budget, you can track what you’re spending and be better equipped to achieve monetary goals. Planning a monthly budget has enabled us to set up funds for vacations and retirement by lowering other expenses.
Think about where you want to be this time next year and get started on it now. You will be glad you did.
Print out the Monthly Budget Planner Printable
Do you have a budget? What is your biggest budget buster?
NOTE: The information provided in this post is for informational purposes only and should not be considered financial advice. You should consult with a finance professional to determine what may be best for your individual needs.