Both people and businesses need to be able to keep track of their money. To make sure that they always have enough in order to keep going, they’ll need to look into things such as how much they make, how much they spend, what their spendings are being used on and much more.
To make sure that they’re aware as to where their money is going towards, they’ll need to create a budget document. This article will teach you all that you need to know in regards to how you can create a budget in Word.
Elements of a Budget
Know that if you’re going to create your own budget document, then you’ll need to learn its basic elements first. They would be the following:
1. Income/Revenue: This would be the amount of money that you’re able to make within a certain period of time. It’s possible that you could either have regular or irregular income, sometimes even both; be sure to point out the type that you have. Knowing your core revenue streams will help you form the foundation of your entire budget. Calculate your estimations as accurately as possible to help you plan budgets for both best and worst case scenarios.
2. Expenses: Every budget should have a list of just how much is going to be spent. Once you have a good idea as to how much income or revenue you gain, you may then set your expense levels. It’s best that you divide your expenses into ones that need to be made and ones that are more of a personal choice. For businesses, it’s best to divide them into production and overhead expenses—the former for expenses related to the production of products and/or services while the latter for those that you already have.
3. Debt: If you have any debts that need to be paid out, then it’s best that you include them into the budget. Don’t forget any forms of interest charge that may be included. Forgetting to project how much interest you’ll generate during the year can lead to inaccurate year-end projections, thus giving you more problems in terms of budgeting.
4. Cash Flow Projection: Every budget document that you end up creating must contain information on when income arrives or when expenses need to be paid. Knowing your cash flow will tell you when you may pay for certain expenses and help you plan out when you are able to pay off whatever debt you may have.
5. Projections: It’s essential for you to be able to project long-term income and expenses. For example, your project budget will record your monthly expenses as they come in each month but should also estimate your average expenses each month while you’re updating the numbers. Doing this will give you an idea as to just how much you’ll have to spend by the end of the year, as well as the average amount of income you earn and expenses you pay for at the end of each month.
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How to Make a Budget
1. Access Microsoft Word: The first thing that you’ll need to do is to install the Microsoft Word program. This can easily obtain by either purchasing it online or your nearby computer store. Once you have it installed in your computer, then here’s what you will need to do:
- Open Microsoft Word.
- Click on the File tab and then select “New”.
- Choose if you’ll make the budget via a new document or if you’ll use a budget template from the choices available.
- Make your budget document.
If you like, you can use the same process to create other types of documents in Word.
2. Make your budget: Now you’ll be learning how to put in the information that the document needs in order for it to serve its purpose. Here are the things that you will need to do:
- Calculate your expenses: The first thing that you’ll need to do is to know what your expenses are so that you can put them into the document. Do this by consulting your bank statements, receipts, or any other document that has a list of things that need to be paid for. This will give you an estimate of how much you need to make in order to get through the end of each month.
- Determine your income: After figuring out the estimated amount of expenses you incur at the end of each month, next is to determine how much income you make. Aside from any regular income you have, put in any additional funds that you may receive throughout the year.
- Look into your current budgeting situation: You have to check and see if you’re making more than what you spend or if you’re spending more than what you earn. It’s always in your best interest to have your amount of income to be higher than your expenses, but there are cases wherein that might not be the case. This means you’ll have to adjust your budget to see what expenses you can cut out that you don’t need to make, or what alternatives you may have that may lessen the amount you spend.
Tips for Making a Budget
- Always have a record of all the things you spend on: Although this was already mentioned, it’s always important for you to have a written account on the things you need to spend on. Keep things like receipts and payment notes at all times so that you’ll get an estimate on your total expenses.
- Be realistic with your budget: Let’s say that you have a budget for a bathroom renovation and there’s a set amount that you’re aiming for. It would be best that you stick to a budget that’s realistic enough for you to achieve. You don’t want to aim too high to the point where you won’t be able to meet your financial goal on time.
Types of Budget
- Project Budget
- Construction Budget
- Renovation Budget
- School Budget
- Daily Budget
- Weekly Budget
- Monthly Budget
If you want to learn more about the other types that you can make, then you simply need to go through our site until you find the articles with the information you need.
Are the other programs that allow me to create a budget document?
Aside from Microsoft Word, you always have other options. For example, you can make a budget sheet by making use of programs such as Microsoft Excel. Just choose the one you’re most comfortable with or the one that you need to utilize.
What if I still go over my budget even after making a few changes?
Then that just means that you’ll need to keep making changes until you make more than what you spend on. Look into your expenses and figure out the ones that you need to make and separate them from any luxuries that you can cut off. There may even be times where you might have to look for other sources of income just to keep up with your expenses.
So long as you use the information in this article, then you should be able to come up with an appropriate budget for you or your business.