Creating Your Monthly Budget Planner
Hello everyone and welcome back to Royal Oak Financial’s blog about, you guessed it, finances! Today, since it’s the beginning of a brand new month, we’re going to chat about the notorious topic of budgeting! Unless you’re a super genius who could track all of your spending mentally and make all the calculations without a calculator, then it’s probably in your best interest to physically plan out your budget.
Whether you’re tech savvy and want to use spreadsheet programs like Microsoft Excel or Google Sheets or an old fashioned fogey who prepares a pencil and paper, there are several aspects of a budget that should be implemented across the board. Additionally, monthly budgets make things like retirement savings that much easier. Here are some things to consider when planning your monthly budget:
Your planned expenses is everything that you plan to spend money on that month; we’ll get to actual spending in a bit. In your planned expense column or section, include the following categories:
- Food: eating out and groceries
- Rent or mortgage (before utilities)
- Utilities: the sum of gas, electric, trash, water, internet, cable, etc.
- Travel: public transportation, car utilities, cabs/Uber rides, car insurance, anything else vehicle related
- Personal: toothpaste, shampoo, conditioner, deodorant, etc.
- Entertainment: movies, bars, alcohol, concerts, etc.
- Pets: vet costs, toys, etc.
- Savings account
Because most people differ considerably, it’s to be expected that your spreadsheet looks nothing like your best friend’s. Make sure to include all of the categories in your day to day life that you plan to spend money on. This makes organizing much easier and in the future can make things like retirement planning and investment playing that much easier!
Like your planned expenses, your planned income is based on how much money you plan on making that month. Planned income isn’t just your income from your main job, but also money that comes in from other outlets. Here’s a suggested list of what to include:
- Main income (before taxes)
- Income from other jobs
- Special event money: birthdays, holidays, graduation
Your actual spending is exactly what it sounds like. After you spend money on something, make an attempt to record it into your budget. At the beginning of the month, write down the same list of categories that were listed in “planned spending” but as “actual spending.” At the end of the month, compare each list to determine whether you saved money or spent over budget. If the latter, consider making changes to your spending next month.
Actual income is the amount of money that you actually make that month, if that wasn’t already clear enough. Track actual income every time you receive a paycheck or other form of money! Similar to spending, calculate the difference to have a better understanding of what to expect next month.
Budgeting is necessary, especially for those who hope to have an early retirement or set up an investment banking account. For help with all things budgeting, make sure to give Royal Oak Financial a call today!