Make a monthly list of what’s coming in. This includes income from your job as well as your spouse’s, and any other money that you might be receiving on a monthly basis, like dividends, bonuses, or interest income.
Make a monthly list of what’s going out. Split this section into categories. Some suggestions are ‘Housing’ (rent or mortgage, homeowner payments, etc.), ‘Recurring Bills’ (utilities, cable, credit card payments, insurance), and ‘Food and entertainment’. ‘School’ might also be a category, or ‘Play’. I would make ‘Vehicle’ its own category. Included in this category are obviously monthly payments on the vehicle and insurance, but also gas and maintenance. Also, make sure you account for big expenses that only occur once or twice a year, like car insurance for example.
After you finish adding up everything that’s coming in and everything that’s going out, search for areas that you are able to cut back a little bit. Most people can cut back a little on food. If you are frequently going out to eat dinner, eat in more often. Think about your habits. Do you need everything you have? Do you need the full cable package? Do you need the higher quality gas? Also, look at bargain websites before you go out and shop for anything. MyBargainBuddy is a good one.
Make your budget a habit. Write it down so you will stick to it. Hold yourself accountable if you go outside of it. A few things: Always pay yourself. Once you get your paycheck – take care of your monthly expenses, then pay yourself by putting some money into a savings account. Preferably one without a debit card or checks, so it’s not easily accessible. If you can’t spend less, then earn more. Get a small part-time job to help with the extra expenses. Always have an emergency stash of about $500. You never know what could happen.