Creating a monthly budget is only one part of the finance equation. It’s also important that you stick to it, remove temptation to overspend, and then bal;ance it at the end of the month to score your results.

If you’ve never created a monthly budget then here’s how to do one in six easy steps:

1. Decide what sort of monthly budget you are going to create
   • Personal – you only
   • Family – includes your children and spouse
2. Create broad categories for your expenses, and under them include sub categories like:
   • Housing – rent or mortgage repayments, body corporate (if any), rates, property taxes and household repairs and maintenance
   • Utilities – electricity, water, gas, heating, Internet, telephone, cable or satellite TV
   • Food – all edible groceries, herbal or vitamin supplements and any pet food
   • Household – household groceries, detergents, cleaning supplies, tools and furniture and appliance replacement / repair
   • Clothing – clothes and shoes
   • Personal – toiletries, cosmetics, hair cuts, beauty services, subscriptions, baby sitting, child support, child allowances or pocket money
   • Transport – public transport tickets, taxis
   • Vehicle – motor vehicle costs including registration, fuel, servicing, tyres, and parking fees
   • Health – Gym memberships, classes and associated expenses
   • Insurance – motor vehicle, home and contents, income protection, disability, trauma, life and travel insurance
   • Medical – dental, doctor, physio, chiro, massage or other related costs as well as heath cover fees and regular medications
   • Education – coaching, pre-school, primary, secondary or tertiary school fees, school supplies, books, conferences
   • Holiday – travel related expenses for annual leave
   • Savings – emergency fund, regular savings
   • Debt Reduction – payments to student loan, personal loan, credit card or additional mortgage repayments above the minimum
   • Retirement – financial planning, investments, additional self-funded superannuation contributions
   • Giving – include tithing, donations, charities and gifts to others like birthday, anniversary, Christmas and other special occasions
   • Fun Money – entertainment, movies, going out, restaurants, take away, and all that other non-essential stuff
3. From your list of expenses, create two columns for each item, one for essentials and the other for extras. Within each general budget category, some items are essential (the mortgage or rent payment, electric bill, and groceries); others are extra (new furniture, gifts, and pizza delivery).
4. For each expense item work out how much you spend and whether it’s essential or extra. It can be helpful to review the prior year’s spending to get these figures. Do not estimate your actual costs as you will under estimate them. Try to use real information.
5. Where costs are only paid annually, include this amount as 1/12 of the total in your monthly budget. If items are less frequent, like furniture, then estimate the monthly proportion by dividing the replacement cost over the life span of the item.
6. Look through these lists to find flexible budget expenses where you can cut back. Put a star next to these flexible items so you can identify them.
7. Add up your budget essentials list and the extras list separately. By keeping the lists separate, you can make cuts more easily, if you need to.
8. Subtract the essentials total from your monthly income and,
   • if you have money left over, subtract the extras total from that amount.
   • If you still have money left over, great! Look into a savings or investing plan (talk to your bank or a certified financial planner for help setting up a plan).
   • If your extras list takes you into negative numbers, start looking for places to cut back.
9. Once you’ve done your budget work out if it’s serving you – that is, it’s helping you achieve your goals or not. If not then you can consider changes to it like trimming more from the extras list to put more money toward debt repayment, retirement or whatever is a higher priority in your financial picture.
10. Once your budget is complete remember to track it each month to make sure you’re on track. Where items listed aren’t expenses for that month but the extra money into a budgeting account so that it’s there when you need it!

If you need tighter controls or more guidance, break your monthly budget into a fortnightly or weekly one (depending on how often you get paid). This will help you make sure you set money aside for each item and you never run short.

And if it’s all too hard to create your own then use my Simple Monthly Budget whihc can be downloaded below:

HTWIW Simple Monthly Budget