At the end of each month, you would enter your actual spending in each category to...

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Finance

At the end of each month, you would enter your actual spendingin each category to identify budget variances. What is yourexperience with?creating and using a personal budget?
Have you tracked expenses to identify variances? If so, whatmethod did you use?
What new strategies are there? How can your tax withholdingaffect your budget or financial goals?

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Creating your first budget can be extremely overwhelming So overwhelming in fact that only 40 of American families have a working monthly budget But its worth the effort Developing a budget that you can maintain over the long term has been definitively linked to building wealth while simultaneously helping you get out of debt and cut expenses When I built my first budget several years ago I knew approximately how much money I was making annually but I had never broken down my expenses by category to figure out what I could afford on a recurring basis or how much money I could regularly invest In short I was spending money on the things I needed and wanted without determining first whether I could truly afford them After overdrawing my checking account once or twice and having to pay several bills with credit cards because of my lack of a working budget I decided to get real and begin a budget 1 Decide to Start a Budget I made the decision to begin a working budget Congratulations For many people myself included this is the hardest part 2 Know How Much You Have If you have savings checking accounts investment accounts or any other financial instruments you will want to know how much money is in each account as well as the interest rates and expenses of each one Make note of this information as it will become important in determining your net worth and the best use of your capital in the future If you use Personal Capital they will automatically pull in this data when creating your budget 3 Know How Much You Make For some people this is easier than others Those on a salaried pay scale can easily find their monthly income For hourly employees or those who work in a business where income may rise and fall unpredictably this can be much more difficult The most important consideration regardless of how you earn your monthly income is to determine the average monthly amount of income that you receive A good way to do this if you receive irregular income is to average out the last 6 to 12 months of recurring income and use that figure If you want to be extra conservative you can choose the lowest monthly amount you have earned in the last year which will hopefully provide you with a worst case scenario 4 Know What You Owe Determining your monthly recurring debt payments should be your next step This should be fairly simple to do as long as you have stopped incurring additional debt in the short term If you havent been able to break your dependence on credit cards thats okay as building a budget will act as a first step for your next financial priority which should be getting out of high interest consumer debt To find out what your monthly recurring debt payments are calculate the total amount owed on each debt account as well as the minimum monthly payment This includes car loans mortgages credit card debt student loans and all other debt that your family pays on a monthly basis This will provide you with the first few line items in your budget and will allow you to determine your net worth Pro Tip Are you currently paying off student loans If so you might be able to reduce your interest rate by refinancing with 5 Determine Your Net Worth Once you know how much money you have and how much you owe you can easily determine your net worth Just subtract what you owe from what you have and you will derive a number This number will tell you the value of your financial resources For me this number was an eye opener When I built my first budget I had a negative net worth I assume this is fairly common in America especially for young people just starting out Pro tip When you sign up for Personal Capital you can connect all your financial account and they will automatically calculate your net worth 6 Determine Your Average Recurring Monthly Expenses This can be the hard part for many people The best way to determine your monthly expenses is to make a stack of household expenses for a month Keep your receipts your utility bills and any other expense that arises during a one month period and divide these bills into categories See Answer

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