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The Nitty Gritty

on February 11, 2014

This post is part of a budgeting series. See All the steps below:

Budgets, Where To Start?
The Other Half of the Budget

Budget Deficit
Cutting Your Grocery Bill
Keep Those Dollars In Your Pocket
I Need Extra Income
Irregular Incomes

By now you should have completed step 1 and step 2. You should have all of your expenses listed, along with all of your income. Now on to the nitty gritty in the next step.

Step 3: Compare your expenses with your income.

Add up the amounts of all of your expenses. Add up the amounts of all of your income. Subtract your total expenses from your total income. What total do you come up with?

Did you have a positive number? If so, congratulations!! You are already doing well with your budget! You may want to set some of the extra money aside for future expenses or retirement, but we’ll go over that later. Did you come up with 0? That also means you are on top of your budget! As long as you keep your expenses within the numbers listed in your budget, you should be able to be on top of your money! If you get to the end of the month and realize that you wrote down a completely insane number for a category (such as $50 for a month of groceries), you have probably blown that budget already. Re-evaluate for the next month with a better idea of how much you spend on that item.

Did you have a negative number? If so, that means that you spend more than you make in a month, which can lead to an inability to pay your bills or excessive credit card debt trying to pay off those bills.

Now that you have determined what is left after all of your expenses each month, you know where you are with your budget. Basically your budget is complete, but come back next week for some solutions to shortfalls in the budget. Feel free to comment below. What did your budget look like? Did you have a positive number, a negative number, or basically zero?

P.S. I am a HUGE Dave Ramsey nerd, so if you are having trouble with what categories to write down or you just want to have an easy form to fill out, you can use Dave Ramsey’s forms by following the link.

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