Determine Your Expected Expenditures

The second step is to estimate all expenditures during the period of the budget. Certain expenditures such as rent, mortgage, and auto loan payments are fixed in amount and do not vary from month to month, whereas other expenditures such as food, clothing, and utilities do vary in amount from month to month. Anticipating these variable expenditures with accuracy may be difficult. The purpose of budgeting is not to put you in a straitjacket in which you cannot maneuver. On the contrary, its purpose is to provide you with flexibility in your financial planning so you can achieve your financial goals.