Monday Money - Setting Up Your Budget

Money Mondays

Budgets - Setting Up

Happy Monday everyone! After discussing why budgets are essential in the last Money Monday post, we are now going to go through how to set up a budget if you decide to make your own. If you do go with a website, such as Mint.com that creates one for you, this post may give you some things to take into consideration. 
 

Income

To start, think about your monthly income that you expect to receive. This includes:

• Paycheck
• Salary - Use the net amount of pay you receive after taxes, 401(k) deductions, and medical insurance has been taken out. Basically, whatever amount gets deposited into your bank account should be the amount you use for income for any given month. 
• Hourly - Use the average of what you typically receive. It is better to be conservative, so that way any extra you make is a bonus for that month.
• Interest/Dividends
• Miscellaneous - This includes birthday checks, work reimbursement, or any other income you receive that month.

The above list is not set in stone, feel free to include anything that makes sense to you.
 

Expenses

After listing your income, you should list the amount of fixed expenses in your budget. Fixed expenses are expenses that don't change month-to-month. This includes, but is not limited to:

• Car Payments
• Rent/Mortgage
• Insurance
• Student Loans
• Cable
• Miscellaneous - This is any amount that is the same amount month to month, like a gym. 

After listing your fixed expenses, list your other costs that are variable and set a budget by what you expect to spend. These type of costs include:

• Utilities
• Gas
• Groceries
• Savings
• Entertainment - I interpret this to include meals out, movies, ice cream outings, drinks out, etc. 
• Laundry - if you don't own your own washer and dryer and need to use a laundromat or apartment provided facilities
• Clothes
• Household Goods
• Miscellaneous

Again, this is not an all inclusive list, but it is a good place to start. Since you are estimating these amounts, they are subject to change. If after three months, you realize you are grossly over budget in one category and not using a lot of another category's budget, you will need to readjust your budgeted amount. The first couple months of budgeting are most useful for figuring out where your money is going and seeing where you may need to adjust your spending.

 

Let us know if you find this helpful! We'd love to hear any tips that you guys may have as well!

**Remember, we are not certified financial planners. We are simply offering a topic to start a discussion about money with the young adults. Before making any financial decisions, please consult with someone familiar with your financial position.