What do you do when there is a drastic change in your income? What if a spouse loses his or her job. First you need a budget worksheet.
1. Budgeting Worksheets.
Here is a sample budgeting worksheet.
Transportation: car payment
2. Start with the Old Budget
If you had a budget before you can start with that. Fill in the amounts you have been spending in each category. This is your starting point. If you have been spending $100 a week for groceries, you can adjust that downward as neceassary. If this is difficult start with a small 10% cut across the board. This is a peocess. It probably won’t be done overnight.
3. Modify the Old to Create a New Budget
Like I mentioned above you can reduce everything by 10% to make the process simpler. If you feel that is too much in some cases you can modify that to 5%. Other categories many need to be reduced even more for example 15% or even 20%.
One thing I did recently was to estimate the total decrease in “take home” income from loss of a job. The difference was estimated to be $8 an hour. I then multiplied that by 40 hours to get a $320 goss change in income for each week. This helped me to develop a target for new total gross income. I estimated the total change to be 35%. In other words if total take home income was $1000 a week the new total is estmated to be $650.
4. Establish Your New Budget
Now you can establish your new buget by reducing each category by the percentage you esablished you need. Go down through all the categories and multiply by 65%. (Since 65% is 100% – 35%.) You will actually muliply by 0.65 to get the number you are looking for. When you have done all that, the hard work is done. Budgeting is fun for me since I like numbers. Now you are ready to try out your new budget.
5. Put Your New Budget to the Test
Now is the time to test out your new budget to make sure it works for you. Each person will have different needs. Do not be afraid to tweek your new budget a little more. You need to be comfortable with your new spending plan.
How to Start From Scratch
If you have not been using a budget, then you will need to establish what your current spending pattern are by recording all your expenditures for a period of one month or 30 days. You can make this fun if you try. There are likely to be some surprises, both good and bad. Do not worry. This process will help you gain control over your spending.
Modify Your Baseline budget
You can now modify your current spending patterns to put them in line with your newly required spending patterns. When you get to this point you have really accomplished something. Give yourself a pat on the back. Give yourself a reward for the work you have done. Rewards I find are a good motivator. I think you will too.
I believe this exercise in budgeting will be helpful for many people. Let me know if you have any questions or comments. I welcome them.
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