How to Make a Basic Budget for 2020

For the average person, many financial woes can be attributed to bad spending habits.  Most people do not know exactly where their money goes because they make impulsive buying decisions to satisfy their wants.  As many financial experts will tell you, debt is often caused by behavior.  So much debt is avoidable.  Let’s start with the basics of a budget.

What Is a Personal Budget?

You are most likely familiar with the idea of a budget, but if you look at a bank statement, you will quickly find out that you spend money on all kinds of things.  It is easy to lose track of what you spend money on when you are in the moment without a plan.  A budget is a financial plan.

Starting Your Budget

Before you can start figuring out WHAT you spend your money on, you need to know HOW much money you have to spend.  If you are a salary employee, check your most recent check stub to find your net income or take-home pay.  If you are an hourly employee, look at your last 3 check stubs and average your net income.

Ok, now that we know what we are working with, let’s look at expenses.

Recurring Expenses

To start creating a budget, you need to understand your expenses.  First, list your recurring monthly expenses.  This includes:

  • Rent/mortgage
  • Car payment
  • Car insurance
  • Credit card (minimum payment)
  • Utilities
  • Cell phone
  • Cable/internet

This list is not all-inclusive.  Think about expenses that are fixed and/or recurring.  If the amount is not fixed (utilities), average your last 3 bills or consider switching from variable to fixed through the utility company.

Variable Expenses

Everyone has bills that vary from month to month.  There may even be things you did not realize are actually considered bills.  Examples of this include:

  • Groceries
  • Vehicle fuel
  • Every day expenses

When it comes to variable expenses, it is a good idea to budget a little more than you think you need.


Now, you should have leftover funds to allocate after “paying” your fixed and variable monthly expenses.  If you are like most people, you have some form of debt like:

  • Credit cards
  • Student loans
  • Medical bills
  • Car loans

These are things that should be addressed with your extra funds.  The snowball method is very useful here.  Order the debts from least to greatest in terms of the size of the debt.  Pay the minimum on each debt.  Then, when the smallest one is paid off, allocate the money you would have put toward the smallest debt toward the next debt on the list plus the minimum payment for that debt.

It is possible to attack debt and pay your bills at the same time!


After you have taken car of the debt on your list, you should consider saving and investing.  On your budget, create a fund or two.  A fund can be for emergencies, investing, or even a trip.  Every little bit counts so, even if it is only $50 per month, it is a cushion you need.

If you are ready to take control of your financial life, you need guidance.  Dsouza and Strachan Law Group has the knowledge and experience to get you on the path to financial freedom.  Contact Dsouza and Strachan Legal Group today for a free consultation.

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