A personal budget is simply a list of expected income and expenses. It helps us to track our income and spend pattern. A monthly budget worksheet acts as a tool to gain better insights into our spending pattern.

Though it sounds too simple, it is important to bear a few things in mind to have an effective working budget.

Income
  • Record income from all sources available every month
  • This should include take away salary credited to your account every month and not your CTC
  • Any additional taxes not deducted at source must be calculated and deducted to arrive at the actual income available
Savings
  • It is prudent to save first out of your monthly income
  • Planned savings should be taken off from your net income
  • Your savings can range between 30% to 10% of your income
  • Save high initially when you have no or less commitments
  • It can be gradually adjusted depending on your family needs

Please go through my post on investment to understand various options available and choose what suits your requirements.

Expenses
  • Document each and every expense
  • Fixed Expense are those which do not change every month
  • Rent, EMI, Electricity, Telephone expenses are some examples of Fixed Expenses
  • Variable Expenses fluctutate every month
  • Grocery, Vegetables, Fruits, Personal Care expenses will vary every month
  • Expenses like buying a new product or wedding / birthday gift will pop every now and then
  • Seggregate and record all such expenses
Conclusion

Putting together a budget is very simple. What is difficult is maintaining a record religiously every month. Store your receipts and record all your expenses diligently every month. It will help you analyze your spend pattern. It will help you set reasonable financial goals and track them too.

Please download my basic monthly budget worksheet where you can record your income and expenses.