US Tax and
Financial Information
Personal Budget does not research or endorse any product or service appearing in ads on this site.
Before making a major financial decision you  should consult a qualified professional.
Bookmark and Share

Site Map
What's New
Free in 30!
Personal Tax
Tax Rates
California Tax
Save Money
Contact / About Us

Home -> Free in 30!   -> Personal Budget

Personal Budget

Making a budget is not much fun, and sticking to it isn't easy.  However, this is an important step.  You must be a good manager of your money in order to have the financial freedom to do whatever you want.

In order to prepare a budget, it is important to track your spending to see what your expenses are.  You can do this on paper, or on the computer in a spreadsheet.  If you don't have spreadsheet software, you can use the free Google™ spreadsheets.  You could also use a software program such as Quicken™ or Microsoft® Money.

Track your spending by categories such as

rent or mortgage
property tax
house insurance
home maintenance
life insurance (buy term life, until you are financially independent)
disability insurance (if you have none through work)
cell phone
heat & light
cablevision or satellite
internet access
auto insurance
auto fuel & maintenance
other transportation costs - bus, ferry, cabs, etc.
medical expenses
books / subscriptions
household furnishings
eating out

Once you know where your money is being spent, you can allocate a certain amount of money to each spending category.  If you are spending more than you are making, or if you are not putting at least 10% of your gross income into savings, then you need to reduce or eliminate some expenses.  For expenses that are paid annually, save 1/12th of the total each month.

You should monitor your progress by periodically making a summary of your net worth.  To calculate your net worth, you simply add up the value of your major assets and any investments, and deduct any debts.   To make this task easier, try our Net Worth Calculator, which can be found on the Calculators page.


Income Monthly
gross income
net income
Spouse #1 $4,000 $3,040  
Spouse #2 $3,000 $2,375  


10% Savings - pay yourself first   $700  
Mortgage   2,020  
Car loan   300  
Pay down credit card debt   240  
House insurance   70  
Property tax   120  
Telephone   40  
Cablevision   40  
Internet access   40  
Utilities - heat, light   120  
Home maintenance   150  
Life insurance   100  
Household furnishings   150  
Groceries   400  
Auto insurance   200  
Auto fuel   200  
Auto maintenance   80  
Clothing & accessories   145  
Dining out   100  
Entertainment   100  
Medical/dental/vision care   100  
Savings for new car   0  
Total monthly expenses     $5,415
Remainder     $0

Net Worth Summary
House $300,000
Vehicle 8,000
Retirement accounts 10,000
Checking account 250
Total assets $318,250
Mortgage $254,000
Car loan 3,700
Credit card debt 4,800
Total liabilities $262,500
Net worth $55,750

This couple obviously didn't read our website before they took out a car loan and ran up their credit card debt, but they are on the right track now.  They are paying themselves first with the 10% of gross income, which they are using to make extra payments on their highest interest debt (credit card).  They have reduced some other expenses in order to do that.  Once they have the credit card debt paid off, they can pay the $700 per month (pay yourself first) on the car loan.  They will also have $240 more per month from the credit card debt payments, which they can use to pay down their car loan faster and/or allocate to other expenses.  Once the car loan is paid off, they can use the $700 per month as extra payments on the mortgage or to invest in retirement savings, and use the $300 per month car payment to save for a new car.

Tip:  Stick to your budget.

If you do not own a home and you have no debt, start saving funds to be used for a down payment on a home.  You should also have an emergency fund that would cover at least 6 months of expenses.  Once you own a home, you should use the pay yourself first money to make extra payments on your mortgage, or invest in retirement savings.

Tip:  Pay yourself first.

If you have children or grandchildren, it is never too early to start teaching them how to budget their money.  This can be as simple as giving them an allowance, and teaching them to allocate their money.  When they are very young, start by giving them a small amount of money which can be used for discretionary spending, long term savings, and special occasions.  As they get older, their allowance can increase, and they can be responsible for paying for their own sporting activities, clothing, and gifts.

Tip:  Teach your children to manage money.

See our Save Money page for more ideas.

Your financial plan should include the following steps:

  1. Define Your Goals
  2. Personal Budget
  3. Get Out of Debt
  4. Buy a Home
  5. Save & Invest

Revised: October 12, 2021

Copyright © 2008 Boat Harbour Holdings Ltd.   See Reproduction of information on

The information on this site is not intended to be a substitute for professional advice.  Each person's situation differs, and a professional advisor can assist you in using the information on this web site to your best advantage.
Please see our legal disclaimer regarding the use of information on our site, and our Privacy Policy regarding information that may be collected from visitors to our site.