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Title: Designing a Budget Around Your Take-Home Income
Author: Lyle Evans
Have you ever found yourself wondering where all the money
has gone and its not the end of the month? There are things
we can do to help ourselves eliminate being in this
situation. Listed below are the steps you may follow, along
with a brief discussion of each:
1. Determine monthly take-home income.
2. Understand all bills and expenses
3. Tracking expenses
4. Building up savings and retirement
5. Spend less then you make.
Determine Monthly Take-Home Income
Whether you are a single individual or a family, you need to
determine how much money is being made each month. Once this
is determined the family or individual knows how much money
there is to work with. If we find ourselves spending more
than we make, then some decisions need to be made.
There are basically three options: get another job to
subsidize your income, get more education or training to get
a better paying job, or decrease your spending. Each option
should be considered carefully by the individual or family.
Understand Bills and Expenses
Account for your bills and the money you spend during your
daily activities. This can be done by saving copies of your
paid bills and recording your daily expenses in a small
notebook. Once or twice a month take inventory of your
expenses. Daily expenses would include all money paid out of
pocket except your monthly bills.
Tracking Your Expenses
We have created a budget using the computer to track our
finances. A good spreadsheet or financial software will help
track your expenditures. We create categories in our budget
that allow us to micro-manage our expenditures.
A brief example will help in better demonstrating this
point. We have categories like food, insurance, auto, fuel,
clothing, savings, children's expenses, etc. You can come up
with whatever categories fit your needs.
After you have determined what your monthly take-home income
is, you need to divide it up between your categories. The
total amount placed in all the categories needs to equal
your take-home income. The key to making the tracking
effective is to enter your expenses regularly and stay
within the amount allotted in each category.
If your track your expenses effectively, in just a few
months' time you will find areas where you might be able to
make changes and save money. We have noticed how much money
we spend on frivolous stuff. Following a budget and tracking
expenses takes inner commitment to be effective.
Savings Account and Retirement
A big part of any budget should be setting aside money into
a savings account. Money in a savings account provides a
little cushion in case of an emergency, loss of employment,
or disaster. The amount that should be set aside in a
savings account will vary depending on your circumstances.
The important thing is that you start. Over time your
savings account will grow larger and accrue interest. As
your employment circumstances improve, you may want to
increase the amount you are putting into savings.
Just a side note about saving for retirement. If your
employer has a 401K program, it would be beneficial to look
into the program. Many employers have a matching program
where they will match a certain percentage of what you
If your employment does not have a retirement savings plan,
then you may want to look at budgeting money for your own
long-term savings plan. This plan could be investing in the
stock market or an individual IRA. You may want to seek
advice from a financial expert.
Spend Less Than You Make
This has been a age-old problem. People in general have a
tendency to spend more than they make. It takes strength and
inner commitment to live within one's means and save for a
A simple rule of thumb is to spend less then you make and
save as much as you can. This practice does not have to be
done overnight, but steady improvements will yield great
Setting up your budget takes time and effort, but can be
very rewarding. Getting in control of your financial future
can be done with the help of a budget and some personal
discipline on your part. Good luck in your budgeting
© Simple Joe, Inc.
© Simple Joe, Inc.
Lyle Evans is a software testing specialist for Simple Joe,
Inc., makers of the popular Simple Joe's Income &
Expenses PC software. Income & Expenses is a quick
and simple way to keep track of your cash flow and stay
within your budget. The Income & Expenses software
is ideal for personal, business, home and club accounting.
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