You can not know how you are doing financially if you don’t have a budget. Without a budget you can easily spend more than you earn and that is a recipe for disaster.

• Step 1 – Figure out what your household earning are per month. I use net after tax and any other deductions.
• Step 2 – Make a list of your monthly bills. Average any that differ throughout the year like heating and air conditioning. I happen to live where my heating in winter balances my air conditioning in summer.
• Step 3 – Think of any yearly bills like car insurance and divide those by 12 to get a monthly figure.
• Step 4 – Estimate any other expenses that happen like car repair and house repairs. Again divide by 12 to get a monthly figure.
• Step 5 – Examine you credit card bill and bank statements for the last month and sort into categories where you spent money. Food, Eating out, Clothes, Entertainment are good starting points ad more as needed. Total those up.
• Step 6 -Total all expenses. Are you spending more than you make?

Next we have to figure out what to cut and that is the next article.