How to Make a Budget: Identify your Expenses

To help those who wanted to learn how to make a working budget but has no one to guide them, I will share my own personal knowledge on how to make and keep a budget. This is based on my own system which I started when I got married, and had tweaked so many times in the past for improvement purposes. This is rather long so allow me to break this into several separate posts.

This is not a budgeting software but using Microsoft Excel we can easily create a spreadsheet or a sort of a budgeting software.

STEP1: IDENTIFY YOUR EXPENSES

The first step in making a budget is to identify the sinks in your kitchen or to know where does your money regularly go to after you received your paycheck. Please see below samples taken from my own list:

(1) God's work
(2) Savings
(3) Rice
(4) Food (other than rice)
(5) Mineral water
(6) Electric (VECO) bill
(7) Telephone (Globelines) bill
(8) Water (MCWD) bill
(9) Magsy's tuition fee, and trasportation
(10) Belle's tuition fee, and transportation
(11) Leyan's share
(12) Family milk
(13) Family vitamins
(14) Home expenses
(15) Miscellaneous
(16) Emergency fund
(17) Recreation fund

It doesn't matter if the list is long. What is important is that, it's realistic.

Allow me to make a brief comment on each item in the list so as to give you an idea for your own guidance.

God's work
My wife and I believe that what we have right now are blessings from God. We also believe that God wanted us (and you) to share your blessings to other people specially those who are in need.

Savings
To me, keeping a budget has two main objectives: To avoid unnecessary or bad debt, and to save money to invest once the right business opportunity will presents itself.

Rice
To us Filipino a meal is not a meal if there's no rice. In my budget I will make sure that we can buy one sack of rice by the time our current sack becomes empty.

Food
This refers to fish, meat, eggs, oil, vinegar, spices, canned goods, vegetables, etc. For simplicity this also includes biscuits, yakult or chaimito, bread, etc.

Mineral water
As of now, we are still using mineral water though I am planning to replace this with something more safer and more economical. Stay tuned once I found the right alternative.

Electric bill, telephone bill, water bill
These are self explanatory. But I think the highlight to these items is that some people already know that they have these expenses yet fail to allocate the necessary funds, so when the bills come they act as if they did not expected it...:-(

Tuition fee, and transportation allowance
Both my first and second daughter are studying in a private school somewhere in Mandaue City where we lived. The transportation allowance represents the money my wife and I paid for the carpool (temporary only), and tricycle fare (temporary also).
As of now, we did not give money allowances to our children but instead we give them biscuits and water (milk or juice) for their school snacks.

Leyan's share
Leyan is our baby daughter. The share represents her milk (Pediasure), and diaper (Pampers).

Family milk, Family vitamins
All for the entire family consumptions.

Home expenses
This represents bathing soap, washing soap and detergents, toothpaste, etc.

Miscellaneous
This is a sort of a buffer fund in case something unplanned comes up like a trip to the pediatrician, an unexpected visitor arrives, etc. If this fund will not be used, this will automatically goes to the emergency fund.

Emergency fund
This fund is for emergency situations like if I lose my job (God forbids), in case of hospitalization and the expenses can no longer be covered by our insurance, etc.

Recreation fund
This is money used to do family bonding activities like going to mall to cool off and do window shopping, going to the beach or out-of-town, playing badminton, going to our local family recreation area called "under-the-bridge", etc.


Your expenses maybe different from my list but that doesn't matter. What really matters is that your list is as realistic as possible. Otherwise, your budget may fail.

Stay tuned for the continuation..."Allocate Funds".

In the meantime be smart when it comes to handling money.

PS: If you want to know more how to save money, how to avoid debt, how to get out of debt, and how to make a budget then click HERE. This is the home page of my blog where I shared my knowledge and experience in budgeting, expense tracking, financial planning, and making a budget that is not only doable but I actually proven for 8 years. I also shared tips, which I actually use regularly, on how to save money, where to save your money, and in the process you will know how to avoid debt. Learning to avoid debt is easier than getting out of debt so I put more emphasis on staying out of debt. As a bonus, I also assembled information on how you can make your own financial planning and budget software. To get all this information for free, please click HERE.

PS: I am interested to know if you find this article helpful so please feel free to drop some comments.