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10 Steps to completing a budget
Starting a budget can be really unnerving at times especially if you have not been used to using one. You may actually have to mentally prepare yourself so that you can be successful. Do whatever you feel will put you in a comfortable or relaxed state (stretching, walking reading etc... something you enjoy)
10 Steps to completing a budget
- Collect all your mail and/or print out e-statements from the past 3 month time period for all your bills (if you cannot locate them all there are no worries) Track down your earnings records for the past 3 months (example: pay stubs, deposit slips etc..) Set your earnings records aside till step "7)"
- Categorize each bill you get so that you know what type of expense it is. Place them in piles in their respective categories (example: credit card, utility bill, storage unit etc...) affix a sticky note to each set of bills so you can identify them later.
- Once you have them separated into piles sift through each stack and find the average cost for the last 3 months for each bill. (example: Visa credit card; June bill 16.00, July bill 22.00, August bill 26.00 <-- add all three months of bills up for the same bill collector and then divide that number by 3) If you only have 2 bills from that particular vendor then only divide by the amount of bills you have rounded up. Repeat this process until you have the average amount that you have paid out in the last three months. It may be a good idea to have a sticky note on each set of bills with the average and which category they belong to streamline the process.
- With all of your averages briefly look over your bills (don't study them) and determine if you have had any additional charges that would not normally be there and make changes with your services accordinly (example: you had the HBO package free for 3 months and now you are being charged for it but can't remember the last time you tuned in then simply call your service provider and remove the extras)
- Grab a sheet of paper and prioritize your bills with their level of importance to you (This can help you visualize what is a need for everyday living)
- Car insurance
and so on...
6. Write in the dollar amount next to each listed item of the average you recorded from step "3)" then add all these numbers up to get your total.
7. Locate your earnings records you set aside earlier and add all three months up then divide by three to get your average earnings (if you only found 2 months records for earnings only divide by 2) then Subtract your total gathered in Step "6)" from your average earnings you just calculated. There may be a significant difference.
8. Try and recall any big/small items you may have purchased that would have made the discrepancy that you paid cash for (example: new TV, dining out, grocery, fuel costs etc)
9. Assess what things you could do without and think of alternatives (example: dining out 4 times/month at work vs. packing a lunch)
10. Once you have the changes you would like to make then create an item on your list for "Savings" if you did not include it initially. You can even fill in on your list other categories you spent in that were cash sales that are expenses. You should now have a good idea of what changes you may or may not want to make and what to expect in months to come. You can take your hand-written list and type it into a spreadsheet on the computer and track your expenses that way so that you can see your progress on the changes that you are implementing.
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