How to Budget using a Monthly Expense Book
Find an expense calendar book to record your monthly budget. If you don't have an expense calendar, use a plain notebook and write the name of the months at the top of each page.
Make two headings at the top of each month to record amounts. Make your first heading "Proposed Budget Amounts" to list your target budget and the second "Actual Budget Amounts" to record your actual earnings and expenditures.
Divide each page into budget categories to record your monthly income and expenses. Start with "Monthly Income" as your first category and then list your expenses in categories like "Necessities", "Needs" and "Discretionary". Include categories for "Savings" and "Emergency Funds" to provide liquidity and growth. Start with fixed items you must pay the same monthly and then graduate down to categories of expenses that are discretionary and tend to vary more often.
Record all projected monthly income received for the given month under your "Proposed Budget" column. Begin by listing targeted amounts for all types of money earned like salary, bonuses and commissions if employed. Include any additional earnings like investments, real estate or family business earnings as well if applicable. Total these target income amounts together and record them under the heading "Total Monthly Income."
Total your projected amounts together for all budget categories to get a subtotal for each. This will give you a means of comparing income and expense goals to actual totals for each category and make adjustments within in your book for each one where necessary.
Add your expense subtotal amounts for all categories together to get an overall projection of your what each month and record this at the bottom of your book. Label this as "Total Monthly Expenses".
Subtract your proposed monthly expense total from your proposed monthly income total to get a budget balance. This amount is the best estimate of your budget and can be used as a reference to make adjustments, cut backs or eliminate items in your expense book to create a balance you are satisfied with.
Write in your true earnings and expenditures for each category item in your "Actual Budget" column. Compare these numbers to your target budget to determine if you have overspent in a particular category and adjust your spending accordingly to balance your monthly expense book.
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* "Personal Finance At Your Fingertips"; Ken Little; 2007
* "The Pocket Idiot's Guide To Living on a Budget"; Jennifer and Peter Sander; 2005