A budget isn’t a budget unless you include a detailed, accurate list of your income and expenses. Any error in these two categories could lead to your entire budget being out of whack. Is that something you are willing to risk?

Income

There are three possible income sources to include in your budget. 1. Your income. 2. Your spouse’s income. 3. Secondary income generated by you or your spouse. You may only have one of these items to worry about, but others have two or three. Of course, the more income you have coming in the better your budget is going to look.

When you include your budget be sure to use net income figures. If you use your gross income you are going to be including income that is “unusable.” This will lead to an unbalanced budget, and in turn many other issues.

Expenses

Break your expenses down into two categories: fixed and variable. Many people think that this is overkill, but it is one of the most important moves you will make. Fixed expenses are those that stay relatively the same each month. This includes your car payment, rent or mortgage, and utility bills. Variable expenses, on the other hand, are those that are never the same. They include gifts, entertainment costs, and gasoline among others.

It is easy to budget for fixed expenses because they stay pretty much the same. But when it comes to variable expenses your situation can become a bit more complicated. The best thing you can do is take an average of your past three months and then use this number when formulating your budget. Take for instance your gasoline expense. Month one: $150. Month two: $115. Month three: $125. If you average these three numbers you come up with a cost of $130. This may not be exact, but it is the number you should use on your budget. Remember, you can adjust any estimates as needed.

If you include accurate income and expense details you will find it easier to manage and follow your budget.