Budgeting

For the fixed expenses, such as rent or phone, it's easy to fill in the exact amount you know you'll have to spend. On the other hand, with the variable expenses, like groceries, there is no single amount you'll spend each month. But based on what you've spent in the past, you should be able to estimate a fairly accurate number for most weeks.

The next step is to compare your income to your expenses. In order to achieve (and maintain) a positive cash flow, you may have to adjust some of the variable expenses—which probably means cutting back or cutting some of them out altogether.

You should revisit your budget on a regular basis. Remember, it's there to help you, and it's not written in stone. Adjusting it if your overall household income changes is important.

 

If your budget changes because you get an influx of cash, maybe from a bonus or an inheritance, you may be tempted to use it to cover increased variable expenses, like eating out, travel, or the newest phone. Certainly using some of the money that way is fine. But it's also a great opportunity to pay down debt or to increase what you're putting away in savings—either in an emergency fund, a retirement plan, or your investment portfolio.