June 20, 2018
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Budgeting 101

Are you caught in the cycle of overspending, growing credit card debt and living paycheck to paycheck? You are not alone! Many Americans suffer the dizzying effects of this not-so-fun carnival ride. Are you ready to get off now?


Okay, so you want to make a change. No matter what your income, creating a budget is a great place to start!


Step 1: Track your actual spending for a one month period


Yes, keep track every dollar you spend whether by cash, credit card, check or debit.  This includes Bill Pay, too!  To make it easy, carry a small notepad, or better yet, just use the notes app on your phone.  And, don’t just record the ATM withdrawal amounts - record the actual cash purchases.

This preliminary step will make it easier to create an accurate and realistic budget. Many times we don’t even realize what we spend, or where. When you’re done, organize, categorize and total it all up.


Step 2: List annual, semi-annual, quarterly and seasonal expenses


Make sure they weren’t already included in Step 1 though. To get you thinking, consider taxes, car registrations and maintenance, insurance payments, school costs, extracurricular activities, birthday and holiday gifts, and vacations, etc. Estimate the annual expense for these items and divide by 12 to calculate the monthly totals.

Step 3: Calculate your monthly income

This is your actual take home pay, not gross. If your income is inconsistent, take an average of the last 6 or 12 months. Don’t forget to include alimony, child support, dividends, interest, bonuses or other assistance.

Repeat Step 2 for any irregular income you receive.

Step 4: List your Expense Categories

Grab a paper and pen, computer or smartphone.  Spreadsheets work great for creating a working budget. Use the information you gathered when you tracked your spending in Step 1 and compile a list of expense categories. Where your dough goes!

Common Categories:

  • Rent/mortgage

  • Internet, TV, cell phone

  • Gas and electric, sewer, garbage, water

  • Groceries, eating out, entertainment

  • Auto insurance, auto payment, fuel

  • Medical insurance, facility dues

  • Household products, laundry, dry cleaning

  • Personal care, clothes

  • Child care, school supplies

  • Savings, charitable contributions

  • Debt payments


Step 5: Create a “projected” column and an “actual” column


Fill in the projected column based off of your Step 1 and 2 calculations. You'll fill in the actual column once the money is actually spent.

Step 7: List your Income Categories

Don’t forget the “projected” and “actual” columns. If only this was as long as our expense list!

Step 8: Calculate the difference between your projected income and monthly expenses

Now, that it’s all laid out, you have a clear picture of your cash flow.  Make changes if necessary, allocating funds where they are needed most and cutting back where necessary. If you have money to spare, consider putting more away for savings. If you are coming up seriously short and need help - don’t turn to credit cards!

Visit www.christiancreditcounselors.org for helpful tips and proven methods. Discover financial freedom as a way of life!



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