Your budget must account for everything you spend each month. We will assume that you pay your bills and buy things either by check, by cash, or by charge card. Also, all of your spending needs to be broken down into separate items so that you will be able to determine where you can cut back on your spending.
Go through all of your checks (or the stubs) for the last six months creating an item for each type of spending. The usual items will probably be: Mortgage payment or rent, car payment or payments, groceries, electric bill, gas bill, phone bill, TV cable bill, insurance payments, charge card minimum monthly payments (separate each charge card), minimum monthly loan payments (separate each one). You will also want to create one item for miscellaneous which will include all of those ATM withdrawals for spending money. For individual occasional items such as new car tires or new carpeting, you will create a separate list.
You will need to do the same thing for any cash that you can account for. This is difficult to do as we do not keep records, other then receipts, for a lot of these purchases. However, if you can separate out some of the ATM withdrawals as to particular items, please do so. Then you will do the same for your charge cards separating out occasional miscellaneous items. A good rule of thumb is that if an item is paid for an average of once a month (say you find you are staying in motels at least once a month), make it a separate item on your budget.
You will need to add up the total for each item and divide by 6 (for the six months of information you are gathering) to get your average monthly expenditure. Also, on the large ongoing items, list the total balance still owing on the loan but not for your mortgage payment.
The following is a typical monthly budget for a family of four. Your budget could be even smaller, particularly if you are single or have no children. Your budget could also be a great deal bigger.
