Make A Personal Budget
In order to make a personal budget you will need to make a plan. A personal budget includes totaling your monthly income & expenses, tracking your spending and making critical decisions on where to best spend your money.
Here's a practical guide for how to make a personal budget and effectively manage your money:
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List on a piece of paper all your monthly expenses.
An easy way to be sure you include all your monthly expenses is to reference your checkbook. Go back for one year and write down all the checks you wrote. This will take some time but you need an accurate view of your spending. You generally have two types of expenses, regular and non-regular. Regular expenses are things like car payments, rent or mortgage, insurance, gas & electric, etc. Non-regular expenses are things such as clothing, pet care, donations, etc. Be sure you include them all.
For non-regular expenses, add them all up for a year and divide them by 12. For example, if you spend $100 year on donations then add $8.33 ($100 / 12) to your monthly expenses for donations. You probably already know what you spend on regular things like car payments. rent or mortgage, but this exercise helps you also find out what you spend on irregular things such as credit cards, donations, pet care, dining out, clothing, movies, etc.
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Total your monthly expenses and subtract them from your monthly income.
Surprisingly enough, you may find that you are living within your means and you are able to make your expenses. So why are you broke and in debt? The problem is cash expenditures. This is where a budget makes the difference. Most people don't keep track of the cash they spend. If you can make a conscious effort to track of every penny that slips through your fingers each day for things like coffee, candy bars, lunch with friends, etc. you may be very surprised.
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Track Your Spending
Use a small notebook, calculator or financial software to track all of your expenditures. I like to use a small notebook or palm pilot, or personal budget worksheets, but the choice is yours. My biggest problem area was groceries, but when I actually analyzed what I was spending and my lack of organization (I was at the grocery story almost every day) I realized I was spending about $20 a week more than I needed to. That's a savings of about $80 a month. Hey, that's a nice dinner out for two!
Making a personal budget doesn't have to mean huge sacrifice, but you can make acceptable changes. For example, if you find that you're spending too much money on lunches at the office, make your lunch and bring it to work. If you're spending too much money at the movies, rent movies instead or cut back on snacks such as candy and popcorn, which can be very costly at the movies. If your long distance phone bill is too high, make better use of email or look into more economical phone plans.
If you're wondering about how much money should be allocated to specific expenses, here's a general picture:
- Housing 31%
- Food 10-15%
- Transportation 17-20%
- Insurance 5%
- Health Care 5-8%
- Clothing 5%
- Savings & investing 10-15%
- Entertainment 5%.
If you're truly serious about how to make a personal buget that will help you become debt free and find peace of mind, take a long hard look and what your habits are, understand where you're losing control, make clear goals and cut waste. It's unrealistic to think you can get out of debt without tracking, you can't cut waste if you don't know where it is.
Mvelopes Personal is an online budgeting system that makes it easy to create an effective personal budget and track every aspect of your spending as it happens. It will help you always know exactly how much you have left to spend, instantly know the impact of every spending decision, effectively manage credit card spending, and quickly create an easy to use household budgeting plan. Click here to learn more 
Personal Budget Worksheets
Budget Calculator
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