How to Create a Budget That Works for You | St. Johns Bank

If you haven’t yet created a household budget, now is the time to do so! A budget serves as a guideline so you stay within your spending limits and put money into savings for an emergency fund.

Making a budget can seem overwhelming at first, but it doesn’t need to be. With these simple steps, you’ll be on your way to creating a realistic budget for your household in no time.

Calculate Your Net Income

How much money do you bring home every month? If there is more than one person with an income, add them together to determine the overall net income. This is your starting point.

Determine Your Expenses

Calculate the rent or mortgage payment, debt repayments, and any other expenses that are the same every month. Add this number up and jot it down, so you remember it.

Figure Out Variable Expenses

It is important to know what your monthly variable expenses are, since they change from month to month. These include utilities, groceries and entertainment.

In a perfect world, it would be simple to calculate every monthly expense—but this is not the case. Variable expenses can change depending on the season (i.e. utilities tend to be higher during certain times of the year) and what is going on in your life at that time. Birthdays, anniversaries and holidays can greatly impact your monthly entertainment budget.

Figure out which events are coming up and plan accordingly. One month, your entertainment budget may be higher, and the next month, it may be lower.

Create the Budget

Now, subtract your monthly expenses from your income. If you have some left over—great! This money can be used for debt payoff, savings or additional entertainment funds.

If you are left in the red, your variable expenses have to be adjusted or you may need to think about ways to increase your income.

Make Adjustments as Needed

It is important to be realistic about your budget. Chances are, if you are feeding a family of six, your grocery budget will be significantly higher than a family of two. If need be, make adjustments and create a new budget that fits your household’s needs.

Don’t become discouraged if your first try at a budget doesn’t work out! You can always revisit the numbers and tweak your variable expenses.

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