What defines good personal budgets? What expenses should you include in the financial worksheet? What can you do about variable expenses in your financial worksheet? How can you personalize a financial worksheet? To answer these questions you must start with a question that may seem has nothing to do with how to Budget money. But the truth is, it is the beginning and the end of developing good personal budgets.
Where are you going?
The key to a good personal budgets or a financial worksheet plan is knowing where you have been and where you want to go. Knowing where you have been is done by insuring you have written down where all you money has been going. You can find this information by categorizing and reviewing your last 6 months of check registers or other accounting methods you have been employing. If you have no such method in place, you have just uncovered your main budgeting problem, which is the first item to be corrected.
If on the other hand you use a check register or other means but have numerous general entries such as “cash” or “miscellaneous” or other unidentifiable labels, this too must be corrected. You MUST know where your money is going before you can divert it. I recommend carrying a small spiral notebook for at least 2 weeks (longer is far better) and recording every cash transaction. I have never had a client or student do this who has not come back to me amazed by what they had learned from this experience.
Financial Worksheet Labels
Once you have a record of all your expenses for a decent period of time, the remainder of the financial worksheet is relatively easy. The following labels can be used to guide you in listing what debts and expenses go where in organizing your finances. Nothing from the list below is written in concrete. So adjust the labels to suit your particular needs. Where an entry is variable, enter a monthly average based upon past history and expected futures.
Suggested labels for financial worksheet
- Income: Your Income, Spouse’s Income, Other Income
- Expenses:
- Fixed Expense: Rent (not mortgage), Other Housing (maintenance, association fees etc., Child Care, Child Support, Alimony, House insurance, Car Insurance, Medical/Dental Insurance, Life Insurance, Other Insurance.
- Variable Expenses: Utilities, Phone, Cell Phone, Cable, Internet, Other Utility, Transportation (gas, maintenance, taxi), Food, Clothing, Medical Expense, Personal, Entertainment, Savings, Other Variable Expenses.
- Secured Debt – Those bills/debts which have a tangible asset (Mortgage, Auto, etc)
- Un-secured Debt – Those debts which offer nothing tangible that can be taken from you for non-payment (credit cards, medical bills, etc.)
Federal Guidelines For Household Budgets
The following are recommended percentages for household expenses. They are offered by the federal government in bankruptcy counseling nationwide. They should be used only as guidelines.
Housing 25%
Transportation 15%
Utilities 10%
Food 10%
Clothing 5%
Medical 10%
Personal 5%
Other 5%
Savings 10%
See also How To Budget in and Emergency