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6 Simple Steps To Building A Better Budget

6 Simple Steps To Building A Better Budget
By Aaron Sarentino
Reviewed by Minh Tong
Updated August 15, 2022

Making (and keeping) a monthly budget is one of the most important things you can do financially for both short and long-term prosperity. 

Many of us simply swipe our cards day-to-day and have automatic payments set up for subscription services.

This lackluster attitude toward our finances might be easy, but it also makes checking our bank and credit statements an anxiety-ridden task. 

And if you have a growing debt-load, it can become all the more difficult.

*** SPECIAL NOTE *** – If your credit cards, personal loans, or medical debts have become unmanageable and you owe over $20,000… then go here for debt relief. We can help!

Creating a better budget is a simple solution to getting ahead on your finances and managing your debt.

Here’s how to get started with 6 simple steps.  

1. Calculate Net Income

Before you can start calculating your net income, you’ll have to gather the necessary financial paperwork. This includes bank statements, investment accounts, utility bills, W-2/paystubs, 1099s, credit card bills, receipts, mortgage/auto loan statements, etc. 

Next, take your total wages or salary and subtract tax deductions and employee benefits, like tax-advantaged retirement accounts and health insurance to determine your take-home pay, or net income.

2. List Your Monthly Expenses

Now make a spreadsheet or a simple list of all your monthly expenses. Tracking your payments will help you discover any “leaks.”

Maybe you’re spending more than you thought on eating out or paying for subscriptions that you no longer use. 

Your expense list should include the following:

  • Car payments
  • Mortgage/rent
  • Insurance
  • Groceries
  • Utilities
  • Entertainment/Eating out
  • Child care
  • Travel
  • Savings/Retirement
  • Debt repayment
  • Personal care
  • Out-of-pocket medical

Once you have your expenses written out in front of you, it will be easier to visualize your financial activity and make adjustments. 

3. Determine Fixed And Variable Expenses

Your expenses fall into two general categories: fixed and variable.

Fixed expenses are mandatory expenses that generally remain consistent month-to-month (i.e. car insurance, mortgage, rent) while variable expenses fluctuate (i.e. groceries, gas, entertainment, gifts). 

Determine which expenses are variable and which are fixed, then add a spending value to each expense.

For variable expenses, review your spending habits over the last several months and estimate your month-to-month. 

4. Total Your Monthly Income And Expenses

Ideally, your net income will be higher than your expenses.

If it is, that’s great. You can use that extra income towards creating an emergency fund, adding to your retirement account, or paying off debt. 

However, if your expenses outpace your net income, you should review your expenses and see where you can make cuts. 

5. Adjust Your Spending 

When you have to adjust your spending to avoid going deeper into debt, your variable expenses are the first to cut.

Can you eat out less and meal prep more? Do you really use that gym membership? Can you carpool to work?

You can also try contacting your phone service or car insurance provider and renegotiate your monthly bill.

While it might not be as easy as cutting ice cream out of your grocery list, it is certainly worth a shot. 

However you adjust your spending, your end goal is to have your expenses lower than your net income. 

6. Make Debt Repayment A Priority

Debt repayment should be a top priority for your budget. If you don’t, the interest payments can eat into your net income and throw off the rest of your budget. 

If you are having trouble making debt repayments, you may want to consider contacting a debt relief company that can help you navigate the process. 

At Americor, we understand the unique financial challenges people are facing today.

As America’s trusted source for debt relief solutions, we aim to empower you with financial knowledge that can lead to informed decisions, whether it’s about savings, investments, or managing debt.

If your debt has become unmanageable and you have difficulty making your debt payments each month, then you should consider a FREE consultation call with one of our certified Debt Consultants, who can provide personalized debt relief advice tailored to your specific needs.

By taking proactive steps today, you can put an end to your financial stress and work towards a brighter financial future. 

Remember, there is always hope for debt relief, and our team of experienced professionals are ready to guide you on your journey to regaining control of your finances.

For more information on Americor’s debt relief services, contact us today to see how we can help you eliminate your debts, and get on the fast-track to becoming completely debt-free!