Adding Up Monthly Bills
Anyone who has a mortgage payment knows how important it is to make sure that they have enough money to pay all of their bills each month. That is why it is wise to have a monthly budget to make sure that money is allocated for each of your expenses. If you do not have a budget, then a shopping trip to your favorite store on payday could leave you will nothing left to pay your mortgage.
The best way to set a budget is to look at your spending habits. This can be quite a bit of work initially but is worth it in the long run to help you be financial secure. You can look at your past spending habits by taking a look at your past bank and credit card statements. Of course, if you pay for a lot of transactions with cash then your bank and credit card statements are not going to include all of your past spending.
If you usually pay with cash or you do not have easy access to your past statements, then you could also start saving all of your receipts for an entire month. At the end of each day place all of your receipts into an envelope. This is also good practice for the future as your continue to track your spending.
At the end of the month, go through each of the receipts and categorize them. For example, group them into things like groceries, household items, entertainment, dining, medical, and so on. You will want to also gather and calculate regular monthly bills that you have like your utility bills, car payments, insurance, gym membership, mortgage, student loans, and more. Once you have all of this together, you can begin creating your budget.
You can choose to utilize a budgeting software tool that makes the process of budgeting very simple as you move forward. You may want to check to see which programs are compatible with your bank so that you can automatically download new transactions into the software periodically. This will save you a lot of time in the long run. If you are looking for a simple budgeting tool, do not waste the expense of buying an expensive complex software program that offers way more features than you will ever use. This will just make the process confusing and overwhelming for you.
You can also create a simple spreadsheet either on your computer on by hand. This is a very simple way to do things. You can then duplicate that spreadsheet each month to enter in your transactions to make sure that you stay within your budget.
Start by deciding how you will categorize your bills. Once you have those categories set, you can divide each of your bills and receipts into those categories. Once they are grouped you will need to go through each pile and enter in each expense into each category.
There are certain bills like your mortgage and car payment that should be the same each month. These expenses can be entered in as the exact amount. But, there are other bills that fluctuate like your gas or electric bill based on your usage. You can estimate this amount by dividing the annual expense by 12. Take a realistic look at the amount you spend on groceries and entertainment and budget accordingly.
By taking a look at your past expenses and adding up monthly bills, you can set a realistic budget. This will help you be fiscally responsible. And, you can make sure that you always have enough to pay your important bills like your mortgage.