The most important aspect of setting up a budget (spending plan) is to have accurate numbers. The basic parts of your plan are a list of all sources of income, all of your fixed and flexible expenses, and any occasional expenses you have throughout the year. You then compare your income and expenses to see where you stand. Use a worksheet to set up your spending plan such as the one found at www.rce.rutgers.edu/money/pdfs/fs421worksheet.pdf
• List income: List all sources and amounts of income available for spending and saving each month (take-home amount after taxes and other deductions). Include only income you know for sure you will be receiving. If your income changes from month to month, use past income amounts to get an average. Sources of income include: wages and salaries, bonuses and commissions, interest/dividends, alimony and child support, disability, workers' compensation, unemployment compensation, tax refunds, pensions/annuities, scholarships/fellowships, Social Security, and the Earned Income Tax Credit.
• List monthly expenses: Use past bills, canceled checks, and receipts to determine how much you spend each month. List all of your expenses, especially small amounts that add up over time.
• List occasional expenses: List expenses not paid on a monthly basis such as quarterly water or property tax bills, car registration, Christmas and birthday gifts, insurance, school supplies, club dues, subscriptions, etc. Total the amount of these expenses and divide by 12. Set aside this amount each month to cover these expenses.
• Balance income and expenses: Add up all of your expenses, and compare the total to your income. If your expenses are more than your income, review your budget to find places to spend less.
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