A monthly budget helps individuals see the amount of financial income and expenses over a one-month period of time. Budgets are used everywhere, from personal monthly budgets involving income and bills, to multi-national corporations’ quarterly expenses and income reports. Everyone uses budgets for financial planning, in personal and professional ways. Budgets allow the creator to control resources and provide accountability for how the resources are used.
Few businesses use monthly budgets – most focus on quarterly statements – but many individuals use monthly budgets to keep up with their income for the month, along with any monthly recurring expenses like car payments, rent or mortgage, phone bills, and how much was spent on groceries. Many employees are paid once per month or every two weeks, so monthly budgets make sense for individual and household use.
Uses for Monthly Budgets
Individuals use monthly budgets primarily to help keep track of expenses compared to income. A personal monthly budget should include:
- Income: whether from a job, inheritance, stocks and bonds, or other source, all sources of income should be listed with their dollar amounts. If these fluctuate, the budget should reflect the fluctuation.
- Fixed Expenses: these include rent or mortgage, phone, groceries, and utilities. If you use a budget to save money, put a fixed amount in this budget line so that you never forget to save that amount.
- Possible or variable expenses: these can include dinners out, office supplies, gym memberships, and “fun” expenses like movies or books.
These types of budgets are very important if you find yourself overshooting your income consistently every month. Budgets can help individuals track side expenses, calculate how much actual money they have, and how much “slush fund” can be used to for unnecessary expenses.
Why Should I Make a Monthly Budget?
If you find your personal expenses routinely overwhelm your actual income, a budget will help you keep track of those expenses, where the money “disappears,” and where you can cut back to keep within you budget guidelines. Starting a monthly budget could also help you keep better track of receipts for unexpected personal expenses, such as how many meals you eat out on a daily, weekly, or monthly basis. This can help you cut down on unnecessary expenses in the long term, and keep better track of tax-deductible expenses (especially if you are a small business owner, you can separate your receipts into personal monthly and business quarterly budgets).
Budgets are not just for money. Sometimes, people trying to lose weight or eat healthier will keep a “calorie budget,” which keeps track of which foods they eat, and how many calories and other nutrients are in the foods. This can help the dieter eat primarily fruits and vegetables, along with lean meats, and avoid unhealthy fat and sugar as much as possible. These are most often in the form of daily budgets, but again, seeing progress over the course of a month can be very helpful for long-term positive changes to diet and weight.
Why Should I Use a Monthly Budget Template?
Our free downloadable monthly budget template can help you write in any line items for income and expenses, and can help you calculate the difference between these two financial points. You can create or delete line items as they become relevant, and you can change the amount of money in each expense and income field to help generate your final monthly budget. At the end of the year, you can compile your monthly budgets to see your annual expenses, as well, which might be helpful for tax purposes. Download our free budget template today to get started!