How to Make a Personal Weekly Spending Budget

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How to Make a Personal Weekly Spending Budget

Personal weekly spending budget

Developing a budget is a great way to organize your finances, but challenges can arise if your bills and your paycheck come on different schedules. For example, your regular monthly bills, like your rent, cell phone bill, credit card statement and student loan, might all be due at different times during the month, while you get paid every Thursday. Having a weekly spending budget in addition to your regular monthly budget can help you stay on track.

Understand the Budget Process

The budget process works the same whether you set up a weekly or monthly budget, but because most of your recurring bills likely come on a monthly basis, it helps to start with a monthly budget. Your monthly budget has two main components: your income and your expenses. You'll need to keep up with both components to make your weekly spending budget work.

Know Your Income

The secret to financial security is spending less than you make, but before you can do that you need to know how much you income you have available. Use a personal finance software system to track your income for the month from all sources, including your salary, wages, tips, commissions, bonuses, rents, interest on savings and investment income. "When it comes to developing a weekly budget, you have to be realistic about how much money you have available," advises David Jones, president of the Association of Independent Consumer Credit Counseling Agencies. "Plug your net (after taxes and other deductions) take-home pay into your budget, not your gross."

Keep Track of Your Expenses: All of Them

Use a personal finance software system to keep track of your expenditures, including the due date and amount of each bill. Your monthly expenses include your fixed expenses, such as your rent and car payment; variable living expenses, such as your utility bills, food and gasoline; irregular expenses, such as a bi-annual insurance payment; and discretionary expenses, such as entertainment and eating out. "People tend to forget things they spend money on, particularly non-recurring items and arbitrary purchases, such as expenses for dry cleaning or that morning latte on the way to work," Jones says. "It's easy to underestimate how much things cost, and it can be tempting to just plug in a number. When that happens, the number is usually too low."

What's Left at the End of the Week?

Knowing how much money you make and how much money you spend will tell you whether you have a positive or negative cash flow. If you make more than you spend, you have a positive cash flow, which you can use for saving, investing, paying down debt or just spending on whatever you want.

If you spend more than you make, you have a negative cash flow. That means you're regularly borrowing to make ends meet. You might be drawing on the equity in your home, putting some of your expenses on credit cards or just not paying all of your bills. "You can only life so long with a negative cash flow before the roof caves in," Jones says. You have a couple of options: You can either make more money, for example, by taking on a second job, or reduce your expenses. "Your budget will reveal expenses that can't be cut, as well as some areas where you might be able to cut back," Mr. Jones adds.

Divide and Conquer Your Weekly Budget

Developing a weekly budget can be more challenging than creating a monthly budget. "People tend to round figures off," Jones says. "Many people assume there are four weeks per month, but it's not that simple." Multiple your total available monthly income by 12 to determine your total annual income, then divide that amount by 52 to arrive at your weekly spending budget. Use your personal finance software system to track which week during the month each of your regular bills comes due. It's likely that some weeks will require more of your weekly income to cover your regular bills than others. For some weeks, you may need to include a regular weekly savings component if the bills due in another week will exceed the amount of income you have available.