4/10/2024 0 Comments Percentages for household budgetIf your income is more than your expenses, you are spending less than you earn and are on the right path to live below your means. Now, compare your Total income (left column) against Total expenses (right column). This number represents the amount of expenses you spend in a month. You will notice in the example below that “savings” is listed as an expense.Ĭalculate your total expenses by adding the numbers in the right column. Set aside money from each paycheck and put it towards your savings. What are some ways that you could control the costs of these expenses?Īlso, make sure to pay yourself first. This will help you to control your spending in this category. When thinking about flexible expenses, think about what you need and what you want. The next group is flexible expenses, which are expenses that you can control. You will pay a fixed amount for these expenses each month. Fixed expenses are items you have little or no control over. Next, list your monthly expenses in the right-hand column.īegin by listing your fixed expenses. This number represents the amount of income you receive in a month. You also might want to make adjustments for income you receive on a yearly or quarterly basis, such as tax refunds or bonus checks.Ĭalculate your total income by adding the numbers in the left column. For example, if your receive unemployment benefits, keep in mind when you will stop receiving these benefits. As you record your income, be sure to consider whether income sources are continuous or whether they might stop in the near future. As you can see from the example below, there are spaces on your worksheet for other incomes sources that might fit your personal situation. The example below illustrates the process. Choose a format that you are comfortable with. If you do not save enough, no amount of financial trickery will give you the returns you need for a comfortable retirement.īudget worksheets are available from many sources. Reduce expenses and unneeded debt so you can consistently set aside a portion of earnings for decades. If you have this type of debt, pay off those balances first. Avoid excess debt, such as credit cards and home equity loans. The Bogleheads approach to developing a workable financial plan is to have a sensible household budget - one that covers needed spending, discretionary pleasures, savings for big ticket items, and savings for long term retirement planning. There is no substitute for spending less than you earn. Perhaps the most important idea underlying the Bogleheads approach to investing is recognizing you need to save a significant portion of income every month to have enough money for a comfortable retirement.
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