Step 1. Gather all pertinent information and documents.
You have to collect all documents that are relevant to your budgeting, both revenue and expense documents. These documents may include monthly bills, bank and credit card statements, pay slips and checkbooks.
Step 2. Create a list of your monthly expenses.
Write down all your expected expenses for the month. Classify them as either fixed expenses or variable expenses. Fixed expenses are those that remain unchanged over time. These expenses include mortgage, car amortization, telephone bills and internet service. Variable expenses change from period to period, depending on your usage. These expenses include school fees, food and groceries, gas, water and electric bills, and leisure and entertainment.
Step 3. Make sure that your revenues exceed your expenses.
Deduct your total expected expenses from your total expected revenue. You are on the right track if the revenues exceed the expenses. However, if the expenses are more than the revenues, you have to cut on some of your expenses. Prioritize your variable expenses. Forego the variable expenses that can be delayed. Do everything you can until your revenues exceed your expenses.
Step 4. Regularly review your budget.
At the end of each month, take the time to review your budget. This practice will help you stay on track. Compare your actual expenses with those in the budget. Maintain the items where you did well. Strategize on the items with which you had difficulty. If you notice that you have an increasing surplus, you can begin incorporating the variable expenses you have foregone in the previous periods.
As a piece of final advice, these steps are nothing if you do not religiously follow your budget. Your success rating totally depends on how serious you are with sticking to your financial plans.