List All Your Monthly Expenses
This is the most difficult part of a good budget and the one many people fail to prepare fully and properly. The first items on the expenses side of a budget are income taxes (federal, state, and possibly city or local), FICA payments (Social Security and Medicare), any dues and expenses that are required by your employment, and all costs associated with your work, such as commuting, parking, day care expenses, supplies you must pay for, and so forth.
It is best in preparing the expense portion of the budget to begin with major costs. Such costs include payments due on school loans, rent, car payments, insurance costs, food, and medical care coverage. You must be sure, after you have listed all of these items, to include cost items for everything else.
Everything else includes small but recurrent items, such as medicine and cosmetics, and larger items, such as entertainment and vacation costs. Most people find that they cannot prepare the expense part of a budget all at once, since they do not think of all the items at one time. A good way to prepare this part of your budget is to think about the matter as time passes for a few days or even weeks, or keep a log.
Verify All Questionable Items
Sometimes you just do not know what the per month cost of an item is. It may be something you pay every six months, like car insurance, or something that changes, like a credit card payment. To verify uncertain items of expense, you may need to make some inquiries. Sometimes this can be accomplished by telephone calls, while other times it is a little more difficult.
Do not guess at the cost of items unless you guess on the high side. Budgets tend to go wrong when people are unrealistic about the costs they will incur.
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