3. DETERMINE YOUR BASIC NEEDS COSTS

If you're interested in eating every once in a while, this is a crucial step in the art of budget making. And yes, O Wise Philosopher, there's no such thing as a "basic need," but just think of this as stuff you really want. So sit down and really think about what you absolutely must have money for each month. No, that does not include weekly lobster dinners.

Here's a list of suggestions of things that you simply must spend money on every month (not just the things you really want, but the things that you are legally obliged to pay). As you read, try to calculate as precisely as possible how much you spend monthly on each one. (The number you see in brackets is Imelda's total, for way of example):

  • Rent/Mortgage [700]
  • Food (amount for meals at home, unless you never cook) [500]
  • Utilities (heat, air conditioning, water, electric, etc.) [100]
  • Phone Bill [100]
  • Cell Phone Bill (yep, she's one of 'em) [40]
  • Cable Bill (if applicable…but this is America, so it probably is) [40]
  • Car Payments [0 - she owns one]
  • Gas/Transportation Costs [200]
  • Health Insurance (if this is automatically taken out of your salary, don't include it) [0]
  • Car Insurance [160]
  • Student Loan Payments [200]
  • Other Loan Payments [0]
  • Credit Card Payments (we'll talk more about this in Step 5) [0]
  • Child Support/Alimony [0]

Feel free to include anything you else you think should be on the list. But the point is to budget for things you definitely have to put money aside for, so remove "signed memorabilia from cast of Full House."

Once you have the list, add up all the numbers, and then divide by four.

The Rule:
This is the amount that you must put aside from your paycheck EACH WEEK.

Do not take this lightly - this is the crux of your budget. If you have a checking account, a good strategy is to open a separate, "secondary" checking account (ask your bank). Then you can transfer the exact amount into that account as soon as you get your paycheck. When you pay the bills, you just write the checks from that account and you know you'll always have sufficient funds. Pretty neat, huh? Okay, we're dorks. Shut up.

If you discover that your costs exceed your income - we won't sugarcoat this: you've got a problem. You can find a part-time job or drop some needs, but sometimes that's not enough. Don't panic yet. Instead, before you start racking up the credit card bills, speak to your bank about your options - financial advisors may help you reduce your bills.

For Imelda:

  • Paycheck is $750 per week ($3000 divided by 4)
  • "Needs" costs tally $2040 per month. Divide by 4 = $510.
  • Subtract. $750 - $510 = $240 dollars left every month

Life is pretty expensive, huh? Betcha miss those annoying parents now. The good news now is that you can always dip into your bonus check from last year, or your check from grandma, or your interest, or the extra money you saved from living under your budget last month.

Before we move on, let us stress one more time to follow "The Rule." Okay, you've been warned - twice - so when you're foodless and MTV-less, don't you dare come crying to us.