From holidays and birthdays to unexpected medical bills, it’s not always easy to stay on top of your spare cash. However, it’s even harder if you haven’t planned out a monthly budget for your fixed expenses. Establishing a limit for your spending each month can help you raise your credit score, stop relying on borrowed money to make ends meet, take drastic debt relief solutions off the table, and feel less stressed about your financial future. Use the following guide to figure out how to set up and stick to a monthly budget.

How to Calculate Your Monthly Budget

Calculate your average income each month. For example, if you’re paid every two weeks, multiply your paycheck by 26, then divide it by 12. If your income isn’t consistent, add up the last three months of pay and divide it by three. If you receive social security benefits, child support, or a pension, include these figures as well.

Next, print out your bank statements and divide your transactions into three categories: fixed, flexible, and discretionary. Your fixed expenses should be the same every month, such as your car insurance payment and rent. Flexible expenses vary; for example, you may spend a bit more on groceries when guests are in town or electricity when the weather is hot. Discretionary expenses are unpredictable and mostly associated with impulse buys, indulgences, or entertainment. Cocktail hour with your friends, a trip to the movies, and a new sweater will all be discretionary costs.

To set a realistic budget for each month and enjoy debt relief, use the 50/20/30 plan. While 50% of your money should be spent on essentials (usually fixed and flexible payments), 20% should be put toward savings or debt. The remaining 30% is yours to use for personal expenses, which will mainly be discretionary.

How to Stick to It

If you’re having a hard time sticking to your monthly budget, re-evaluate what you see as a luxury and a necessity. While dinner is a necessity, ordering delivery is not. You can save a substantial amount of money by buying groceries and eating at home or preparing meals for the week ahead. 

If credit card debt relief is your goal, put your cards in a drawer and delete the numbers from your computer and phone memory. Tell your friends that you’re trying to save money so they can’t hold you accountable the next time you feel like shopping. If you’re signed up for monthly subscription services, cancel them while you catch up on past due payments—you can always renew them later.

If you’re still having trouble sticking to your budget, Greg Dunn Bankruptcy and Debt Relief Attorney of Honolulu, HI, is here to help. When you can no longer make minimum payments, you’ll need his expertise to get creditors off your back. This Oahu native has dealt with over 12,000 bankruptcy cases, so he’ll handle your specific debt relief needs with efficiency and tact. Learn more about his offerings on the website, or call (808) 524-4529 to schedule an appointment today.