How to Budget With a Balance Sheet

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When you live on a budget, you need to plan your spending carefully, and a balance sheet simplifies the process for you and makes it easier to keep track of your finances. You don't need a sophisticated computer program -- or even a computer -- to do this. As long as you know what you typically pay each month and how much you make, you can determine your monthly budget for things like paying down credit card debt and building a savings.

Look at old bills to determine how much you pay per month for things like rent, Internet, phone and cable service. For bills that change, like a gas or electric bill, average the past three months and round up to the nearest 10. For example, if you paid $100 for electricity in June, $120 in July and $110 in August, you pay an average of $110 per month.

Determine how much money you make per month. Look at your past few paystubs to determine this.

Subtract your monthly bills from your monthly earnings. This is your budget for the month. From that amount, set aside money for things like groceries. The U.S. Department of Agriculture estimates that the average family spends about 9.8 percent of its total spending on groceries. The Bureau of Labor Statistics, on the other hand, estimates that the number is closer to 12.5 percent.

Keep track of every purchase you make on your budget sheet. You may not realize, for example, how much you spend eating out or buying coffee each month unless the figures are in front of you. Monitor unnecessary expenditures that you are able to eliminate from next month's budget.