Learn Budget Basics

Are You Credit Wise?
1. Start with a KISS (Keep It Super Simple)

Put together a very basic list of your monthly income (i.e. your paycheck) and expenses. List things you can easily identify: rent, car payment, insurance, utilities (you get the picture). You can add details in the future.

2. Calculate your monthly, post-tax income

Determining how much you make each month is essential. Sounds easy enough, but getting to this figure sometimes isn’t as straightforward as it seems. If you get paid monthly, it's easy – just use the amount from the check. If you’re paid in a different interval, use the chart below:

Monthly Salary Calculation

Salary Payment Interval Multiply Salary
Amount By
Divide By
weekly 52 12
every 2 weeks 6 12
twice a month 24 12
every 3 weeks 17.34 12

Don't forget to include any other sources of income other than your paycheck that you use for expenses each month (i.e., interest income, maintenance, child support, etc.). Download Sample Budget Worksheet (Source: Agensi Kaunseling dan Pengurusan Kredit (AKPK) also known as the Credit Counselling and Debt Management Agency)

3. List Expenses

This part can be the most time consuming, because chances are you have more individual expenses than you have sources of income. It's also likely there are some expenses hiding somewhere in your life that need to be exposed- maybe that XL branded latte every Saturday? If you look honestly, you'll find those items. Do your best to group expenses into categories. The best way to start is to simply group "like with like" and get your list in order, don't worry about estimating amounts just yet.

4. Select time period and record expenses and revenues

A month is a common increment of time, but use what works best for you. You need to match all your revenues for the increment you choose against all your expenses for that period.

The golden rule: If using months, don't record an expense to the month you paid the bill, but rather record the expense to the month when the expense was incurred. By matching revenues and expenses to the period in which they occurred, you will be able to determine if your monthly expenses exceed your monthly income.

5. Break it down

Try your best to identify what items are not reoccurring. It might take a few months to figure these and other difficult categories out, but it will really help you out in the long run. If you find a large amount of money is going into one category, like utilities for example, break it down into specifics: electricity, water etc.

6. Stay on Track of Actual Expenses

Keep track of your actual expenses during the month and group them into categories. Tracking rent, phone (stuff you get a bill for and write one check) should be easy. The tough part will be cash expenses like that latte. It really helps to carry a small pocket size note book with you and write them down as they are incurred.

7. Put your PC to work

There are many free budgeting software programs available to download. Standard bookkeeping programs also have features to make budgeting and paying your taxes easier too. Need more help? Consider consulting a qualified expert.