Budgeting Basics Plr Ebook

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Table of Contents

Foreword
Chapter 1:
Budgeting Basics
Chapter 2:
Record Your Income
Chapter 3:
Make a List of Expenses and Put Them in Categories
Chapter 4:
Total Everything and Make Adjustments to Spending
Chapter 5:
Review Regularly

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Chapter 2: Record Your Income

Synopsis

As mentioned before, when making a budget one of the most important steps is figuring out what your current financial situation is. You need to figure out the exact number of all income that you have. This can sometimes be a difficult process for people, especially those who are not good with numbers or have multiple forms of income to keep track of.

If you are a person who is not sure of how to or has difficulties when trying to figure out your exact income, this chapter is meant for you. Do not feel overwhelmed! Yes, it may be a difficult process and be quite stressful, but with proper tips and the useful information this next chapter will provide you with, financial success is right around the corner.

Continue reading to learn more about recording your income, its importance, and how you can do it.

Figure Out What You Make

If you want to create a functional budget that is beneficial for you the first thing that you have to do is figure out know much money you make on a monthly basis. It is advised that you do this with a calculator or a number machine because there will be many numbers involved and you want the calculations to be exact. As well, using a calculator or number machine will make this process much less stressful which is good for anyone. This is especially true with a number machine because it prints out the calculations as they are made which can allow a person to make notes or easily review the information.

You need to factor in all forms of income, no matter how small they may be. A lot of people make the mistake of short changing their selves while doing this step because they may think that certain forms of income are too small to count. All forms of income must be counted; cutting yourself short can completely mess up your budget. All the small things add up so make sure to count them!

The following steps will help you to figure out what your exactly monthly income is:

Calculate The Amount In Your Liquid Accounts:

A liquid account is a general term and can include many different types of accounts. It basically refers to any type of account that you can draw money from on a moments notice. The account may include your savings account, your checking account, as well as your investment account. While checking how much is in each one of these accounts it is important for you to remember that some of these accounts build interest and that some may have expenses attached to them. This must also be factored in to your numbers as it will make a big difference while making your budget, even if it does not seem like it now.

Figure Out Your Exact Monthly Income:

The next thing you need to do is figure out what your exact monthly income is. As mentioned before, this can be more difficult for some compared to others for many different reasons. Maybe they have more than one form of income or maybe they get confused by math, either way it can be quite complicated for them. Keep in mind, this is not usually an easy process for any person but it can and must be done.
For those who work on hourly wages you will begin by figuring out what your hourly pay is and then multiplying it by the number of hours you work each week. For those who have varied schedules it is advised that you use the hours from the lowest week instead of the highest because it will prevent you from falling short in the future. Once you have done this you multiply that number by four because there are four weeks in a month. The number you calculate will be your total monthly income, that wasn’t that hard right?

For those who work on salary wages you will need to figure out how much you make on a monthly basis instead of yearly. This is because it is much easier to stick to and create a monthly budget rather than an annual one. All you will have to do is take your total yearly income and divide it by twelve. The figure you come up with will be your total monthly income.

For those who work odd jobs or do not have regular work this process can be a little more difficult. What you need to do if you are one of these people is come up with an average amount of income for the past six months to a year. It is advised that you use a month that had hard times so that you allow yourself breathing room while you create your budget.

It is important to remember to factor in all other forms of extra income as well. Any amount needs to be factored in, no matter how small it may be. This is because you need to be very precise while figuring out how much money you pull in on a monthly basis. Everything from alimony to child support needs to be considered. Even something as small as cash back on credit card purchases needs to be accounted for in your list of earnings.

Chapter 3: Make a List of Expenses and Put Them in Categories

Synopsis

The next step that you must take if you want to create to a beneficial budget is to make a list of all of your expenses and put them into categories. Just like when you were making your list of income, you must include all expenses no matter how small you may think they are. The small things add up after a while and before you know it they can overrule your budget.

This step may be a little bit more complicated than the previous one of listing your income. This is due to the fact that you will likely have many more forms or expenses than you will forms on income. This will likely be a process that will take a bit of time to complete. It is important that while listing your expenses you are precise and take your time, cutting corners will almost surely lead to failure of your budget.
The following chapter will provide you with some tips and information that will make your experience with determining your expenses much less stressful and much easier.

What Are You Spending?

Now that you have determined what your exact monthly income is, it is time for you to begin figuring out what your monthly expenses are and to sort them into different categories. Sorting your expenses into different categories will help you with determining which expenses can be cut, we will go deeper in detail with this step in the chapter following this one.

No matter how difficult the process may be or how frustrated you get while doing it, it is important that you do this step. You must make sure that you are not spending more money on a monthly basis than you are bringing in. While making your list of expenses you will likely be shocked by the final number that you come up with. It is most likely much higher than it needs to be.

The following steps will serve as your guide through this process and make things much easier on you:

Figure Out What You Owe Each Month in Debt:

You need to determine what you spend each month on debts. This can include items such as car loans, title loans, credit cards, student loans, personal loans, and any other form of debt that you may have. This is extremely important to do if you want to get yourself out of a hole and better your financial situation. It is important to list down each item as well as total them all together.

Remember To Include Monthly Insurance Payments:

It is important to make sure that your things are protected in life but at the same time it also important to make sure that you have the money to pay for this protection. When you create your list of expenses you need to make sure to include all of your monthly insurance expenses. If you pay for your insurance quarterly or annually you need to divide the amount of your payment by the appropriate number so you can determine its monthly cost. Common forms of insurance people have is car insurance and home owners insurance.

Calculate Your Monthly Utility Bills:

Utility bills must also be accounted for in your list of expenses. You cannot really figure out an exact number while doing this because your utility bills will be slightly different from month to month, especially during season changes. You need to figure out how much all of your utility bills were for the past three months and then calculate the average bill amount for those three months. Examples of utility bills are electricity, gas, and phone bills.

Figure Out What You Spend Each Month on Groceries:

We all need to eat so we all have grocery bills. As well, we all know how expensive groceries can be. Even generic brand items seem like they are getting more and more expensive every day. It is extremely important while listing your expenses that you remember to include your average monthly expenses on groceries. Just like with utilities, your monthly grocery expenses will likely differ so you cannot get an exact number but you can get an average. You may find that you need to switch to cheaper brands or lay off of some items for a while.

Remember Special Occasions:

While listing down all of your expenses it is important that you remember to factor in special occasions. Events such as birthdays or certain holidays can end up being quite expensive. When you make purchases for these occasions it is important that you keep the receipts so that it is easier for you to include these expenses in your list.

Study Your Previous Cash Withdrawals:

You need to make sure that you include all of your cash withdrawals that went to various different things. You need to look at your bank statement and figure out the amount of your withdrawals and then list them down along with the reason the money was spent.

Once you have made this list it is time to move on to the next step in your journey. Continue reading to learn more valuable information.