Here is an easy way to go over your budget, put your expenses in categories, and see how much you are actually saving when you net revenues and expenses. The formula is simple: Revenue – Expenses = Net Income. So take the extra 10 minutes to go through your monthly budget, it could save you hundreds every month. Using a pen and paper, tally up all of your expenses every month.
Here are a couple examples of what you can write down:
Income – Earned income from your job
Other Income – this is your passive income. Any income that you receive regardless if you work or not. Things like dividends received from stocks or interest income from bonds.
Total Income: Income + Other Income
Gas – What you put in your car to drive it.
Food – groceries, restaurants, snacks
Entertainment – going out money, movies
Miscellaneous – you should always factor in a 5 – 10% buffer in your expenses
Credit Card Bills – pretty much everything else you charge on the credit card
Car payment – monthly bill the car company sends you
Mortgage or rent – everybody needs to live somewhere
Utilities, electricity, water, cable, internet – gotta have lights.
Looking at your expenses, look to see what you can cut and then how much you can save. Saving is like a muscle that is built over time. The early you start saving the better as habits are harder to make the older you get. Hope this helps