Now more than ever, renting is expensive! Creating a budget will help you keep track of rent and other expenses, and it can help you find places where you can save money. Your budget should include the cost of rent and other necessities, like food, transportation, and utilities, but it should also include things like savings, clothing, and entertainment. Ready to create your budget? Here’s how!
Gather Expense Data
Before you create your budget, you need to have a solid handle on your monthly expenses. That may sound straightforward, but many people don’t know how much money they’re spending or what they’re spending it on. In preparation for planning your budget:
- List all of your regular expenses, such as rent, utilities, and your car payment.
- List periodic expenses like insurance premiums you may pay quarterly, routine vehicle maintenance, and any other expense that recurs but not on a fixed monthly basis.
- Use past expenses to project a realistic number for groceries, gas, and other day-to-day living expenses.
- Keep a log for a week (or even a month). Carry a notebook with you or open a memo on your phone and record every single penny that you spend to find any expenses you might be missing.
- Put something aside each month for emergencies. As a renter, you may not have to spring for a new roof, but there are still car repairs, medical bills, and other unexpected expenses.
- If you have a savings goal, put your regular contributions on the list.
Gather Income Data
If your monthly income is regular, you already have this number. But if you work hourly, sometimes work overtime, or are self-employed, your income may vary. When planning your budget, don’t be optimistic. Plan based only on the income you can count on. Nobody ever ran into problems because they had more money at the end of the month than expected!
Choose a Format
You've never had more options for budgeting. The tried-and-true pencil and paper method is still available, but you may also opt to create your budget on a spreadsheet or with online budgeting software. You’ll find a wide range of software options and free worksheets available online. One method isn't necessarily superior to another, so choose the method that’s comfortable for you and that you’re most likely to keep up with.
Consider Dates, Not Just Totals
Most people budget by the month, and that makes sense. However, few of us get our full monthly income in one lump sum at the beginning of the month. That means you’ll either need to get a cycle ahead or to account for due dates and payroll dates as you build your budget.
Creating a budget will help you stay on track with your financial goals and recognize necessary adjustments before they slip out of control.
Published June 19, 2017
