Creating a Budget

Creating a Budget can seem daunting, but it could help you reach goals you've been dreaming about.  About.com helps you get started on the road to financial security.

You'll want to spend no more than one-third of your net income, which is the amount you earn after taxes, on rent.  This is also the guideline your potential landlord will be using when determining whether you can afford an apartment.  If you want more money available for expenses, stick to apartments that are closer to 25% of your net income.  You can also save money on rent by splitting the costs with roommates.  Be sure to budget for additional costs that you'll run into when you first move into a new apartment, such as first month's rent, a security deposit, and possibly the last month's rent.

To create an effective budget, use budgeting software such as Quicken or Mint, or a spreadsheet.  Before you sit down to begin, make sure you have all the information you'll need such as bank statements, pay stubs, utility bills, etc so you'll have an accurate picture of all your income and expenses.  After you've entered all your income and expenses, you'll need to adjust.  If you are making more than you're spending, decide what you want to spend your extra money on, whether it be savings or paying down credit card debt.  If you're coming up short, look at expenses you can cut such as dining out or other entertainment.

Finally, be sure to review your budget monthly to make sure you're staying on track.  If major life changes happen you'll also need to be ready to make changes to your budget accordingly.