Take a look at your anticipated income and expenses for the following year. Other expenses, such as groceries, may differ, but you can use your bank and credit card statements to calculate the average amount you pay every month and add those numbers to your budget.Īt this point, you should have a rough idea of how much you plan to earn in 2023 and how much you plan to spend. Some monthly expenses, such as rent, are nearly always the same amount. Consider where your money goes and include budgeting categories for anything you purchase often.Īt this point, you can begin estimating your anticipated monthly expenses. Instead of having a single budget category for entertainment, for example, you might choose to have separate categories for books, music, movies, concerts and streaming media. Some people divide these line items even further. These are the items you buy regularly, even if you don't spend the same amount of money every month. Once you've determined your fixed monthly expenses, consider your variable monthly expenses. Utilities (electricity, water, cable/phone).You can begin by creating a budget line item for every major monthly expense, such as: Once you've calculated how much money you can anticipate earning in 2023, it's time to start thinking about how much you'll spend. By doing so, you'll be able to manage any changes that may take place over the next year, whether you earn more, less or exactly the same as you anticipated. Recalculate your anticipated income every three months.Other people plan ahead for variances in cash flow, especially if certain months always bring in less income than others. Some people divide their annual post-tax income by 12, giving them a monthly figure to budget from.
If your income fluctuates monthly, use last year's earnings as a guide.If you receive freelance income, subtract your estimated tax payments before you start budgeting. If you receive a paycheck from your employer, your taxes will already be taken out. Track your anticipated income on an after-tax basis.Here are three tips to help you calculate your income as accurately as possible: If you anticipate earning a tax refund, a company bonus or a financial gift from a loved one, add that to your budget as well. Then add in any other sources of income you receive, be it checks from freelance work or cash from a side hustle. Start by calculating the money you receive on a regular basis, such as your paycheck.
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