How to Create a Budget You Can Live With....

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1. Detail out what you spent on everything over the last 12 months (you can use a spreadsheet for this, paper and pencil or a program like Quicken or Money) and total up the amount you spent for a whole year, so you know what your current yearly expenditures are. 2. Make a list of what you want to save money for - retirement, college education, a new house, a new car, etc., how much you need to save for each goal and when you wish to accomplish your goal. 3. Detail out how much money you earn in 12 months, listing your income from employment and your income from investments, etc. 4. Compare the amount of money you are earning from employment to the total amount of expenditures computed in step 1. Note if you are making more than your expenditures or making less than your expenditures. 5. Compare the amount of money you already have saved and your current earnings on your investments to the goals you created in step 2. Determine how much more you need to save for each goal per month. Compare this amount to the amount your investment earn per month and make note of the difference between your current earnings on your investments and the amount you need to earn each month to reach your goals. 6. If in Step 4 you determined that your expenditures is greater than your earnings from employment, then take a look at all the items in step 1. For each item, determine if you can purchase it cheaper elsewhere, do with less of it, or do without it all together. Make notes for all of this. 7. If in Step 4 you determined that your expenditures are less than your earnings make sure that you are investing all of the excess, such that it will be available to fulfill your goals you created in Step 2. 8. If in Step 5 you determined that your current savings and earnings from your investments is not enough to fund your goals every month, take a look at Step 1 (unless you did this already in step 6, then just look at those results). For each item, determine if you can purchase it cheaper elsewhere, do with less of it, or do without it all together. Make notes for all of this. If you have additional money after revising the amounts you spent, then add that to the amount you will invest toward you goals each month. If this is still not enough money to meet your goals, then consider additional employment, investments, possibly a reduction in your goals and/or speaking with a financial counselor. Any comments, suggestions, questions?