A budget?!

[Nightshade X]

Hi. Does anyone here know how to prepare a budget? I know that I need to make one to help control my spending habits, but I have no idea how. Could someone pleeeeeease tell me how?

[Mithrandir]

There are some really good christian books out on budgeting, so if you can get to a christian book store, I'd say look for something by larry burkett. He's very sharp. If you can't, I've heard some really good principles on this one:
1. Start with giving 10% to God. It's really important to show thanks to God for how he has blessed you! I won't get into the rest of the biblical reasons just now, though...
2. Next, tuck 10% away. It's important to save for when you no longer have an income, etc.
3. Live on the remaining 80%. The beginning is tough. You have to find out where your money is currently going. Start with a list of all your expensis (the biggest one's first) and figure out how much you really spend. Start with housing and work your way down. Generally something like car payments, insurance, school bills etc. Divide seperately all the stuff that's just entertainment. THAT's usually where people need to cut spending. It's not always hard, either.

Let me know if you want more tips.

- oldphil

[starfire]

[Mithrandir]

Um, starfire? Is this like one of those pages I get on my electricity bill?

"This space intentionally left blank."

[Nightshade X]

lol. I've seen those, too. they're so tricky >_<

[Mave]

Erm....I don't know whether this might help. But I use only one credit card to centralize all my bills and expenses. That way, I can easily monitor my spending habit and watch out for any identity theft.

[starfire]

Sorry guys! I guess I accidentally sent a message! I am really not thee person to ask about budgets, but have you tried one of those thingies they start with an a . It's like a chart of all your income, ans tithe and taxes and bills and all that good stuff. We're learning about it in personal finance class. Sorry about the mixup

[Mithrandir]

One of those thingies that start with an "a," eh... Hmm... An Accountant? I can't think of anything off the top of my head that starts with an "a." All I can come up with is an "Organizer" but that starts with an "o."

Let us know if you come up with the full word, k?

[Rauken]

Start with required/important expenses: bills, rent, food, tithe, gas. Try to set a limit with certain things, like how much food or clothes you'll get per time period. Pay for the necessary things first and don't forget to save a little and set some aside for unexpected things (car repairs, new appliances, etc.) whatever you have left can go towards fun things like going to the movies or buying new DVDs.

[termyt]

What Oldphil said and it's best to do this before you take on too many "big expenses" too. You need to know how much you can spend before you commit yourself to (especially) a car payment.

Rent is hard to avoid and you need t o pay utilities and you definitely don't want to get into a situation like you make $1350 a month after taxes abd you need to pay $675 in rent, $175 in utilities and $500 for your car. That would leave you without any money for food, let alone entertainment. I know, you say "duh" but I know a guy who did something like this.

There's a lot to consider, so planning it out is a great idea. I've learned this the hard way.

[agasfas]

Being only 19 yrs old I'm not sure if you would want my advice but I'll dispense some anyways

1) first pay all your bills off
2) 5-10% of the remaining $$ to the church; and by church I don't mean it has to be the physical church, God references the "church" as his followers. Anything you can do to help others.
3) tuck about of the 40% (remaining from 1-2) away into savings
4) then the remaining you do what you want.

[Kaligraphic]

The first thing to do is to gather information.

Write down everything you spend - every single thing (well, you can group (e.g. dinner foods, $47.59)) and keep doing that. At the end of each week, total up how much you've spent on what. Categorize your expenses to better spot spending patterns, and divide larger categories into subcategories to see where your money is really going. Sample categories and subcategories include:

Food
--Nutritious, store-bought food.
--Fast food/take-out/pizza
--Fancy food (real restaurants)
--Junk food

Clothing

Medical

Household (laundry detergent, cleaning supplies, that sort of stuff)

Personal care/hygiene (shampoo, deoderant, etc.)

Entertainment
--Movies
--Anime
--Star Trek Conventions
--Whatever (make your own subcategories)

School (I'm guessing you're in college)
--Tuition/fees
--Books
--Misc (scantrons, blue books, pencils, note paper, whatever)

And so on. Make note of all of your bills, and figure the monthly cost. You will be putting all of this information into a chart, showing the breakdown of your expenses.

Now, list your monthly income. This is the number you start with. A good initial goal is to make sure that you keep expenses lower than income. For that, you look at your list of expenses, and figure which ones you can reduce to achieve your goal. For instance, rent is typically not too variable, and changing locations is a bit of a hassle, so you don't want to start there. In accounting, there are two types of expenses associated with production - fixed and variable. (There's also a lot more to it, but if you're interested in accounting, you'd probably get more out of an actual accounting course than I could put in a post or two.) Anyway, I'm going to use the terms slightly differently from the actual accounting usage for this explanation.

Fixed expenses are incurred whether or not you do anything other than work - rent is a good fixed expense. Car insurance, gas to get to work, utilities, that sort of thing.

Variable expenses are incurred deliberately - for instance, clothing, food, entertainment, and the like are variable expenses. You can decide to have filet mignon every day and drive up the food cost, or live on dog food, and bring it way down. (living on dog food is not recommended.) The first place to control food is with the junk food, fancy food and fast food. You can control entertainment spending by, say, renting a movie to watch with friends (split the cost) instead of going to the movies. You can reduce your clothing costs by buying less or cheaper clothes.

Once you've gotten expenses to be less than income, decide on your next goal. Whether it's 50% to the church or 80% to savings, or trying to live on only 70% of your income, you have to choose your goal yourself for it to really change your spending habits.

If you want to use a preexisting expense chart, practicalmoneyskills.com has one, along with their own lesson on budgeting.

*edit* Wow, this turned out to be a long post */edit*