Frugal Friday! Budgeting for Beginners

I’m not a financial planner. I don’t have a finance or accounting background. But I do have some basic bookkeeping knowledge. I know that before you can create a budget, you have to know where your money is going. I've created a very basic balance sheet. What money is coming in, and what money is going out.

Take a sheet of paper. Or open a spread sheet.

Have a column for item name, a column for income, and a column for your expenses.

List all of your incomes first, then total

Next list your expenses, then total.

Here is an example of how a simple finance sheet should look.

INCOME
Take home pay
child support
SSI or other income
EXPENSES
House payment or rent
renters insurance
utilities - electric
utilities - water
utilities - gas
telephone
internet
TV
Rent to own payments
car payment
car insurance
car - gas expense
car - maintenance
credit cards
student loans
groceries
savings
prescriptions
entertainment
eating out

Income should be larger than expenses. But how often do we look at our expenses and realize that we are spending more than our income?  This is why it is so important to keep track of the money coming in and out of our homes.  

Once you have determined where your money is going, it’s easier to see where changes can be made. Am I eating out too much? Can I reduce electric bill?  Should I look into less expensive entertainment options? One you have all of your expenses laid out in front of you, it's easier to figure out where you need to cut back.

Next time, we’ll look at some ideas on how to make some simple changes in your electric bill.