Personal budgeting question

by Gina
(Maine)

When you are creating a budget how do you decide how much to allocate to each category and how do you decide the categories you use?

My husband and I are trying to get a better hold of our finances but keep on stumbling every time we try to get on a budget. Variable expenses like utilities and other miscellaneous make it harder to stay on track.

Great info, thanks.

LM says: As useful as budgeting can be it does not come easy. I would suggest you find a way that makes it work for you guys. Wether it be electronically like I explain here or on a piece of paper the best way to make it "stick" is to keep it simple for you. As far as categories, i like to keep them broad and I do it based on our expenses. By keeping them broad it makes the whole process of weekly budgeting much quicker. So look at where you guys are spending your money and try to consolidate into broad categories that you can track month in and month out. That way you'll have a way to measure. Finally as to how much allocate, I suggest you first take a look at how much you have coming in and then subtract fixed expenses like rent/mortgage, utilities, savings, etc. and once you have those covered then allocate money to more discretionary categories like miscellaneous and so. For me I include in miscellaneous stuff like entertainment, clothing, and other discretionary shopping. Hope this helps