Interrupter CheckmarkInterrupter IconFacebookGoogle PlusInstagramGroupRamsey SolutionsTwitterYouTubeExpand MenuStoreCloseSearchExpand MenuBackStoreSign in
Skip to Main Content

Enter to Win Cash for Christmas!

The Budget Breakdown

Let’s get right to it. Here is a good breakdown of how to make a budget from the income and outgo sides.

You must make a new budget for each month. Every time that calendar flips, there are new birthdays, holidays, insurance bills, proms and so on. There is no one budget that is perfect all the time every time. So make a new budget for a new month.

The Income Side

On one side of the page, list all your income sources for the month. That includes:

  • Paychecks
  • Income from a small business
  • Side jobs
  • Freelance work
  • Residual income
  • Child support

There may be other nooks and crannies that we didn’t cover, but the overlying rule is this: If you receive money during the month, write it in your income category.

If you are married, do not separate your incomes. His and hers are now ours. It doesn’t matter if one of you nets $1,000 a month and the other brings home $10,000. You are now an $11,000 household.

The Outgo Side

Every expense you have each month gets written down. Rent, food, cable, phones and everything in between. Again, since you make a new spending plan each month, some months you’ll have expenses and others you won’t. A gift budget might be high in December and low in April, or there might be car insurance due. Focus on one month at a time.

Money

Start budgeting with a free trial of Ramsey+ today!

Clear all the confusion. If you are confused about how to categorize expenses (does a restaurant visit count as “food” or “eating out”?), simply determine what system works best for you. When you have two categories that are obviously different (such as gas money and entertainment), you should separate them. But when you spend $100 at the grocery store buying food and things to run your household such as shampoo and paper towels, you might put that all under “grocery.”

Start Early

Make your budget a couple of days before the month begins. That gives you the feeling of control, of being ahead of the game. People get dejected if it’s August 7 and they have not yet made August’s budget, so aim to have that done by July 29. Don’t let the month sneak up on you without being prepared.

When you make a purchase, write it down that day. Take 60 seconds when you get home from work to update the checkbook or budget. A quick way to get discouraged is to open a wallet or purse and find a week’s worth of receipts in there. Be vigilant and do this small amount of work every day.

All Signs Point to Zero

The point of a budget is to make income and outgo equal zero. They cancel each other out. If you cover all your expenses during the month and have $500 left over, you aren’t done with the budget yet. You must tell that 500 bucks where to go. If you don’t, you lose the chance to make it work for you in the areas of getting out of debt, saving for an emergency, investing, paying off the house, or growing wealth. Tell every dollar where to go.

If you think this makes budget-making easy, check out EveryDollar and get started on making your money behave!

Related Articles

8 Money Tips for Singles

8 Money Tips for Singles

8 Minute Read | Budgeting

Are you single and ready to . . . budget? Check out these eight money tips for singles that will help set you up for success!

Anthony ONeal Anthony ONeal

How to Budget After a Job Loss

How to Budget After a Job Loss

5 Minute Read | Budgeting

Job loss and pay cuts are scary, but you can still make the best possible decisions with your money right now. Stand up against that fear with these practical budgeting steps.

A budget is just a plan

What Is a Budget?

5 Minute Read | Budgeting

What is a budget? It’s not a restriction on spending—it’s a plan for what you’ll do with your money. Find out some budget myths and the best way to budget.

It's Easier Than You Think! 

It's Easier Than You Think! 

The right budgeting app will help you find money.
Get Our FREE Tool

It's Easier Than You Think! 

The right budgeting app will help you find money.
Get Our FREE Tool