Figuring out a budget you can live with

This may not be the most fun topic, but it’s an important one. It may be temping to take your first paycheck and go on a shopping spree…


but that is not a good idea. The bills will come due and you need to be able to pay what you owe.

Step 1 – Take a look at your pay stub and determine how much you make in a month after taxes are taken out.

Step 2 – List all of you expenses.  If you don’t know what they all are start with what you do know and estimate the rest.


Step 3 – Remember to list savings as an expense.  Eventually the car will need to be repaired or you will need a down payment to purchase a home and having savings is how to accomplish those repairs and goals.

Below is a sample budget:



Rental insurance


Car payment


Car insurance/gas














Retirement savings


Total expenses


Net Salary


Remaining funds


Step 4 – Now that you have a budget to begin with, start saving your receipts for one month.  Add up the amount spent in each category.  Perhaps there are categories that you need to add, such as eating out, to your budget.  Make whatever changes are necessary.

Step 5 – Decide what you will do with your savings.  It might seem crazy to think about saving for retirement when you just started working, but if you get into the habit of doing it now you will have the freedom to be able to retire in the future. Talk to anyone you know over the age of 50 and they will agree.

Use your savings to establish an emergency fund.  What is an emergency fund?  Money that will help you navigate a crisis and keep it from becoming a disaster.  The general rule for such a fund is between 3 and 9 months living expenses.  It’s best to start with 3 months. You can always decide to add to the amount later.  Using the above sample budget you would need to save $6,000.  Since you are saving $500 a month it would take 12 months to reach that goal.

Step 6 – Every six months take a look at your budget and spending habits.  Your life will change in ways that you can’t always foresee – make sure to modify your spending habits to reflect your life.

Taking the time to budget your spending and saving will give you the ability to not only survive, but to enjoy what you have earned.




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