Step 9

Develop your budget!

Refer back to your net income and item by item subtract your expenses beginning with your needs, followed by your goals and discretionary spending making sure that your expenses and goal savings do not add up to more than your income. Use your average expenses from past experience but whatever amounts you decide to budget, they must be reasonable. For example:

• Net monthly income = $2,000
• Monthly expenses = rent $600, food $300, transportation $200, utilities & phone $100, entertainment $200, clothing $200, household $50, gifts $75 = $1625
• Leaving $375 for goals

If $375 isn’t going to allow you to achieve what you want to save for (trip, retirement etc.) then the options are to slim down other areas of spending or increase income. These are the same options if you can’t seem to cover your expenses with your income.

Next step is how to put the plan into action!