Perhaps the biggest problem with estimating an expense like heating is the fact that you still have set a budget allocation for this unknown expense. Granted, you'll never be able to estimate your heating expense with 100% accuracy, but you should be able to get it close. Once again, the best way to get an accurate number of this line-item is to look at your past bills, which are usually available on the utility company's website. This is also usually true for electric expenses, especially if this is how you heat your home. Obviously, we spend far less on heating expenses in June than we do in December. The best example of this would be the cost to heat your home. Internet or bundled entertainment serviceĪlthough a lot of your household expenses will remain constant from month-to-month, such as your mortgage, car payment, and insurance premiums, some of these monthly expenses can and will fluctuate throughout the year.Now it's time to take note of your general living expenses. If you can save $50 just on one line item, image what you could save if you really took journalizing to heart. At the end of the month, they now see that they've spent over $50 just for coffee that they could have easily made at home for about $7! Now you should be starting to see the value of journalizing. However, after journalizing this expense, they see that they are spending $2 every day for a large coffee. Most people simply don't realize just how much money they spend on coffee, for example. You'll know exactly how much money you spend every month on your living expenses, as well as your "comfort items." However, be prepared for some rude awakenings during your journalizing experience. By taking the time to jot down everything you purchase, you'll quickly see where your money is going and you'll have a truly accurate snapshot of your total expenses. The best way to list your expenses as accurately as possible is to create a weekly journal or create a monthly journal. Let's face it, our lives are hectic and we can easily lose sight of all of the "little extras" that we purchase throughout the week/month/year. You really have to keep an open mind and try to list everything that you spend money on. Step 2: Estimate Your Monthly Expenses Create a JournalĮstimating your expenses can be a bit tricky. Now you know what you have to work with and it's time to figure out your expenses. Add up all sources to get your total monthly net income. Be sure to include all sources, including income from your spouse, child support, social security, etc. There may be other sources of household income too, in addition to your wages. Granted, this method isn't exact, but it should get you close. If your income varies a lot from week to week, which is quite common for wait-staff positions, for example, then you'll need to look back for the past few months and determine your average monthly income from this job. These funds can be used to establish a rainy day fund, or to save for larger purchases or retirement. If you can establish a budget and pay your bills without the use of overtime, you'll be way ahead of the game. But if overtime is only given out "as needed", or if the amount of overtime you get fluctuates greatly, it's best to stick with your base pay. If you're reasonably sure that overtime is constant and it won't be reduced in the near future, go ahead and count it. We never recommend counting on overtime when determining your monthly income, although we realize that this can be a major source of income. This is the easy part, although it can get a bit tricky when considering overtime or fluctuating hours. The very first step in creating a budget is to estimate your monthly take-home income, which is your net income, or the actual amount of your check after taxes and other deductions. Now, let's get started! Step 1: Estimate Your Monthly Take-Home Income Fundamentally, a budget is pretty simple, and perhaps the best way to get started is to use a budgeting worksheet. Whether you choose to budget online or on paper, there are several steps to creating a budget that works for you. The manner in which you budget isn't quite as important as the fact that you're actually doing it. But, for others, it's simply because they don't know how to do it properly. For others, it's because they don't see the need for a budget because they don't have "financial problems". So, why are some people reluctant to use a budget? For some, it's the feeling that they will no longer have control over their money and it will inhibit their lifestyle.
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