Crafting a budget isn't just a good way to help you stay on track with your money: it shows you where your household expenses are, where you can adjust and how to save your cash. Every household should have a budget, particularly when you are working with just one income. Both spouses and all household expenses are pulled from one paycheck, so it's important to account for every dime spent. Whether you're scraping by or living comfortably, a budget is essential for a one-income family.
Instructions
Step 1
Track your spending for one month by writing down how you spend your money, keeping receipts and invoices, and gathering together your monthly utility bills. Budgets only work if they're accurate, and gathering and cataloging your spending are the first steps toward creating an accurate and effective money plan, notes Bankrate.com.
Step 2
Sit down with your spouse or partner and go through your bills, spending receipts and recent pay stubs so you can create a clear picture of your monthly cash flow, suggests CNN Money. Separate the spending into incoming money, outgoing spending, and outgoing bills so you can differentiate between necessary and unnecessary expenses each month.
Step 3
Open a spreadsheet on your computer or use accounting software to help you work out your one-income budget. QuickBooks, Quicken and Mint.com all allow you to simply enter in your expenses, spending and income and will categorize everything for you. If you'd rather work your budget up with pen and paper, divide the paper in half and write "income" on one side, and "spending" on the other.
Step 4
Enter the amount that you'll make each month from the one income. Remember to include any extras, such as bonuses and freelance money that you may receive. Then carefully enter your monthly expenses on the other side, making sure that your numbers are accurate. Separate unnecessary spending into categories, such as "eating out," "clothing," or "home items."
Step 5
Add together all of your expenses, necessary and unnecessary, and subtract the final number from the single-income figure. The money left over is your spending or saving money. If the number is negative, you're spending too much for your solitary income. Go over your budget with your partner to find where you can reduce spending from the unnecessary line items, especially those that were affordable with two incomes but unrealistic with just one.
Step 6
Practice living on your budget for one month to see how your family fares. Follow the budget and spend only what's within the allotment for each line item. Then you can evaluate how effective your budget is, and if any of the line items need to be adjusted. A budget is an ongoing process, because expenses vary from month to month, but you can slowly learn to live within your means and stash the excess in savings accounts, notes MetLife.com.
Tips and Warnings
- Try for an ideal balance of spending and saving. CNN Money recommends that you budget 30 percent of your money for housing and debt, 26 percent for living expenses and spending, 25 percent for taxes if necessary, 15 percent for savings and investment, and 4 percent for insurance. This ensures a balanced budget that takes saving into consideration while allocating the rest sensibly.
Things You'll Need
- Paper
- Pay stubs
- Utility bills
- Spreadsheet
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