So now you have a budget and are living on it. Well, one thing that has made a difference in how I look at the amount of money I can spend in a month is to look at it pay check by paycheck. This is called an allocated budget. This means that you break down all your monthly expences by paycheck. If you only get paid monthly then this part of budgeting is done and easy for you. You would only need to have 1 budget. For others who get paid every 2 weeks or every week then you will need a separate allocated budget so you can plan for your monthly expenses.
For example. if you are saving to pay your gas and electric utility bill (1 a month) and you get paid twice a month you need to separate the payment into the 2 paychecks you get that month. so lets say you owe $50 for each month. you would have to save $25 a paycheck so you have enough at the end of the month to pay your bills. Sounds easy enough right? Well it is a little harder is some aspects then I thought and very easy in others.
It is hard when you have a bill that isn’t the same every month. for this type of a category, I have used a general average of the last 6 months of the bill to find how much I should save. We also get paid weekly so for us it is a little bit each month that we have to budget in. It also gets tougher when you have a category that doesn’t divide right. So you have to have either a little over the mount budgeted in or you have to have a few more cents in one week then the other.
The Last Part of budgeting is reporting at the end of the month. This is when you sit down and look at your budget and see how you did. Then you make the budget for the next month. The first few times you budget you will probably be moving around a lot. This is ok and perfectly normal to do. Just make sure that every bit of money you have coming in has a label of some kind and a place to go.