To make and use a monthly budget, follow these steps:
1. Make several copies of Form F-4. Making a budget you can live with is a process of trial and error, and you mayhave to draft a few plans before you get it right.
2. Get out Forms F-2 and F-3, which include your income and expense figures.
3. Review the expenses listed on Form F-4. As you’ll see, they aredivided into common categories, such as home expenses, food, and transportation. If you don’t have any expenses in a particular category, you can cross it out, delete it on your computer, or simplyleave it blank. If you have a type of expenses that isn’t listed on the form, add that category to a blank line.
4. In the first column (labeled “Projected”), list your average actual monthlyexpenses in each category. Calculate these amounts by adding together your actual expenses for the two months you tracked, then dividing the total by two. If you have seasonal, annual, or quarterlyexpenses, include a monthly amount for those as well. For example, if you pay $3,600 in property taxes each year, you should list a projected expense of $300 a month ($3,600 divided by 12) in this category.5. Add up all of your projected monthly expenses and enter the total on the line marked “Total Expenses” at the bottom of the “Projected” column.
6. Enter your projected monthly income (fromForm F-3) below your projected total expenses.
7. Compare your projected income to your projected expenses. If you are spending more than you earn, you’ll either have to earn more or spend less tomake ends meet. Unless you’re anticipating a big raise, planning to take on a second job, or selling valuable assets, you’ll probably have to lower your expenses. Review each category to look for ways tocut costs. Rather than trying to cut out an entire expense, look for expenses you can reduce slightly without depriving yourself of items or services you really need. For example, you might be...