How should I create a personal budget?
For instance, are there certain "normal" portions/percentages of my income I should spend on food, rent, entertainment, etc.? Any other good rules of thumb for building my budget? I'm fairly young and new to this - only graduated a couple of years ago - any help would be great.
Thanks!
Answers
237 points
josephconlin answered one year ago …
You might take a look at Mint.com. It will allow you to track many accounts that have internet access to them, and it looks like it has a budget tracking system as well.
I think that your budget should be set up so that you take care of the highest priorities first, and then you see what you have left after that. For instance:
Saving/Investing - you should pay this first, but you might need to figure out the rest before you find out what this can be.
Rent/Mortgage - it costs what it costs, but you might find better deals at times
Utilities - Electricity, heating/cooling costs, phone, TV, internet, etc.
Loans - Student loans, auto loans, credit cards, etc.
Other fixed expenses - Insurance? Pest control? Lawn care? etc.
What you have left is what you have available for groceries, clothes, entertainment, etc. You can set up a budget for this if you wish too, but I find that there are certain times of the year when I buy lots of clothing (school starting for the kids is a big one, birthdays, Christmas/holiday's, etc), and other times when I buy nothing. This might work better as an annual budget instead of a monthly one.
Hopefully these suggestions will help you get started with you budget. Knowing where the money goes is a major step toward being able to control (and grow!) the money better. Good luck!
2775 points
Oldman answered one year ago …
JosephConlin's answer is really good. And I can add only a little bit...keep a diary of all expemses, for at least 3 months. Don't forget to put aside a bit in a liquid acct for "emergencies". Also, if you are working, think NOW about retirement funding, because the time value of compounded small gains is enormous over a thirty-forty yr. period.
You will find that some "fixed" expenses do grow with age & inflation...others may decrease, but knowing when certain bills come due, and keeping a good credit record by paying down debt, is the best way to start.
699 points
7million7years answered one year ago …
Or, you can do the 'no budget, budget' ... just keep trach of ALL of you expenses - EVERY PENNY - for JUST one month (you may then want to factor in annual expenses such as car insurance; that means just digging up a few invoices). That's it ... worked a treat for me, because it gives you a pretty good idea of where your money is going ...
... then, you can decide if you want to deal with it by cutting expenses (yawn) or increasing income (yay).
269 points
stocktraderdan answered one year ago …
The Federal Reserve is a good starting point for understanding money and managing it:
http://www.dallasfed.org/ca/wealth/BuildingWealthStandalone.swf
