Housing Costs – Mortgage/rent, taxes, maintenance costs.Categorizing also makes it easier to find ways to improve your budget. While this may work for some, it’s often better to start with a more detailed categorizing of expenses to get a better handle on your spending. That rule suggests you should spend 50% of your after-tax pay on needs, 30% on wants, and 20% on savings and paying off debt. The 50/30/20 rule is a simple way to budget that doesn’t involve a lot of detail and may work for some. Setting budget percentagesīudget percentages can be a good way to guide you as to how much you should be spending on various items each month, giving you a more realistic budget to work with. While developing and sticking to a realistic budget can be stressful, getting a handle on your spending can help you live a more financially secure life. It’s also important to plan for emergency expenses, such as a car or home repair or health emergency. To get a better idea of these costs, take a look at your bank and credit card statements. They include items such as groceries, gas, healthcare, clothing, dining out, entertainment, hobbies, haircuts, charitable giving, and vacations. Your variable expenses may change from month to month. These costs stay relatively the same and are easier to track. Your fixed expenses will include your recurring monthly bills, including mortgage or rent, phone and utilities, insurance, car payment, savings/retirement, childcare, tuition, and gym memberships for example. With a little research through your statements, you may be surprised to see just how much you’re spending. Don’t record what you think you should be spending on items such as groceries, but what you actually are.

When calculating expenses, put them into categories. When determining income, use the amount you bring home after taxes and after any other deductions, such as child support, are taken out. A realistic budget starts with determining your monthly income and then calculating all of your monthly expenses.

Regular monthly expenses