i am what you read

Starting with a quick disclaimer: The amounts used below are for examples only and in no way are meant to mean that’s what yours are. Everyone has their own bills and salaries and will need to use your own when setting your budget.

Whether you are with significant other, or going it alone, a budget is a healthy way to manage your money. I learned early on that a budget is the best thing you can have or you will spend through everything and learn the hard way just how quickly it disappears. If you work hard then you should be able to enjoy the fruits of your labor.

Meaning…Just because you budget doesn’t mean you don’t have fun or can’t buy things., it just means that you do it in a manner that allows you to worry less.

I like to use Google Sheets , but you can use a piece of paper, or another program that you’re comfortable with when setting up your budget. I suggest you keep in mind that the numbers may change from time to time, especially until you work out the kinks and it flows easy for you. Before long you only use it for reference or make monetary adjustments due to pay changes or to remove/add a bill.

To set a budget, start with the basics. Your salary. If you’re paid by the hour then use that amount and multiply by 40 to obtain your weekly pay. Then multiply that by 52 to get your yearly pay and divide that by 12 for your monthly pay. Example:

$26×40=$1040

$1040×52=$54080

$54080/12=$4506

Next you want to remove all deductions (taxes, insurance, 401K, etc.). Example:

$4506-23%=$1036

$4506-$1036=$3470

This is your approximate take home after taxes. I used 23% in the example, but your deductions may be a different percentage based on your state and depending on what other deductions you have and how frequently they are removed. So now you notate the total you got, using your numbers, as your salary for the month.

Now for the bills. Typically your rent/house payment is the main bill you have to pay each month. This is always the best place to start. Usually rent/house payments remain the same each month. So that total monthly payment is easy to figure.

Next comes the rest of your monthly bills. When calculating a healthy budget for items which may differ each month (as utility bills usually do) you will want to take a look at your past bills and gather an estimate based on that. Example: Your past bills are $45.06, $86.34, $62.87 and you have lived in your place for 6 months. You will add those 3 bills (highest, mid and lowest) then divide by 3 to obtain the average…

$194.27/3=$64.75.

So…$64.75 will be your estimate to use for that particular bill. Do this for all the remaining bills that differ each month until you have your estimated averages.

Once you have all of your amounts gathered and calculated out, it’s time to begin a spreadsheet. Again, you can use Excel or Google Sheets. I have used both, but there are numerous programs which can be utilized for this purpose. Or, if you so choose, you can even use paper and do everything with a calculator and pencil. I highly suggest a pencil versus pen for the sole purpose of making easy corrections/changes.

Figure out which works best for you and let’s get started!

See you in Part 2!!!