Download the spreadsheet mentioned in this podcast. It allows you to create your own personalized budget using the five categories discussed in the podcast.
Organize your budget into the following five categories. Using these five categories allows you to updated your budget quickly and makes reviewing the end results easier to understand.
Income
Create a separate line item for each source of income. I.E. one for each job. If you have a job and your spouse has one then you’d have two line items.
List the net income. That is the amount that you actually receive from you company after taxes, benefits and retirement withholdings.
If your pay is based on commissions or an hourly rate input your best estimate for that month. Don’t get conservative or aggressive, list the most accurate number possible.
Savings
Create a separate line item for each item your saving for: emergency account, home, car, etc.
Variable Expenses
Expenses with a monthly changing cost. This includes such things as food, entertainment, utilities, gas etc.
Again, each one of these expenses should be in their own line item. Create enough line items to help you understand where you money is going but not so many that tracking your daily expenses becomes cumbersome.
Fixed Expenses
Expenses that are the same each month. Examples include rent/mortage, Netflix, cell phone, haircut, etc.
Again, each expense line item should be in it’s own line item.
Debt Payments
Any payment to debt. This includes your mortgage, car loan, student loans and credit card payments. All of these should be in their own line item including a separate line item for each credit card.
Net Income
Net income is your total income less all your expenses. Don’t worry if this number is a negative. Achieving financial abundance is done bit by bit. Creating a budget and organizing it into these five categories will allow you to make adjustment, which we’ll discuss in the future, and get to a positive number.