How to Build a Master Budget

by Sam Ashe-Edmunds

A master budget lets you do much more than set spending limits or track your expenses. A comprehensive budget that includes formulas for different income levels will help you guide your financial planning and adjust it if necessary. Creating a master budget that lets you plug in several different income scenarios will help you plan in your investment strategies.

Master Budget

A master budget includes all of your projected income and expenses, rather than focusing on only one or a few areas, such as fixed expenses or salary and wages. A comprehensive budget lets you determine what type of excess income you might have, allowing you to invest or save that money based on your financial needs, such as maintaining a specific level of liquidity or meeting retirement savings goals.

List Expenses

The first step in creating a master budget is to list your expenses. The Better Business Bureau provides a sample budget at its website listing dozens of common expenses for a household such as utilities, car payments, rent or mortgage, insurance and groceries. Split your expenses into fixed and variable categories. Fixed expenses, such as a car payment or rent, don’t change each month. Variable expense change each month, such as groceries. For annual projection purposes, estimate an annual monthly number for variable expenses and plug that into your budget. Adjust those numbers each month as your expenses come due.

List Income

After you have listed your expense, add your expected income to your budget sheet. This includes all sources of income, including salary or wages, bonuses, capital gains and sales of items and gifts. If you will not be withdrawing any money from financial instruments, don’t include any of that principal or projected interest or capital gains in your budget.

Create Formulas

After you have listed your expenses, create a line that totals your total expenses each month under each of the 12 monthly columns. Do the same for your income. Create another column that subtracts your expenses from your income to show your monthly income or loss. Create another line or lines that show the percentage of your monthly income you wish to set aside for investing, retirement, vacation planning, a college fund or emergency money. For example, you may wish to budget 10 percent of your net income to saving for a down payment on a home or to put toward your retirement. If you have several savings goals, consider the effect of any gains you make from your investments on your savings plans. For example, if your retirement portfolio is doing better than expected each month, you can reduce your retirement contribution and add more to your house down payment fund.

Create Multiple Scenarios

After you have created your budget, copy it and make two more budgets sheets that project a higher income and a lower income to see how a better-than-expected income, or downturn in your financial situation, will affect your savings and investments plans. Plan your savings set-asides accordingly, based on each scenario.

About the Author

Sam Ashe-Edmunds has been writing and lecturing for decades. He has worked in the corporate and nonprofit arenas as a C-Suite executive, serving on several nonprofit boards. He is an internationally traveled sport science writer and lecturer. He has been published in print publications such as Entrepreneur, Tennis, SI for Kids, Chicago Tribune, Sacramento Bee, and on websites such, SmartyCents and Youthletic. Edmunds has a bachelor's degree in journalism.

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