How To Create A Budget Plan That Works
Many consumers are aware that having a budget plan is an advantage
. Surprisingly, not everyone has one. Others may have tried to follow a budget plan in past but found it to be ineffective. The question is, how can you make it work? In this article, we present practical tips on how to create a budget plan that you can follow:
Monitor your spending. Begin by getting to know your personal spending. Make a list of all your expenses for the whole month, from your biggest purchases down to the smallest cents. Calculate your total expenses and compare it from your monthly income. Based on your list, it will be easy to see if you have been spending more than what your income permits.
Time for change. Study your list and choose items that you can eliminate. For instance, if you have one or two magazine subscriptions, do you really spend time reading them or do they just pile up? Perhaps you can slash it out to cut back on your expenses.
Set automatic payments. Set aside at least 10% of your salary and put it immediately in your savings account. The best way to do so is to arrange automatic payment with your bank. You can also set automatic payments for your credit card bills or loans to make sure that you will not miss a single due date.
Set goals and prioritize. Define a specific goal that you can work on. This may depend on your financial situation. For instance, if you have an extremely large amount of debts to pay, then debt repayment should your first priority. As soon as you're done paying all your creditors, you can set a new goal to work on. For example, you can start building your personal savings fund.
Contribute to your retirement fund. A low salary is not an excuse not contribute to your retirement fund regularly. If you are presently employed, take advantage of the opportunity to pay it alongside your employer. Don't forget that retirement savings include tax privileges so it is a great investment.
Maintain a good balance. When creating a plan, it's important to consider that you will be following it for a long term. Hence, it has to be reasonable. Don't cut down too much on your food budget that compromises your family's health. IN the long run, one family member might get sick because of poor nutrition and you'll end with higher medical bills to pay.
Give yourself a break. Don't entirely slash out your budget for leisure or recreational activities. If you are working on a small budget, find activities that does not require a big amount of money but which can be truly enjoyable and worthwhile at the same time.
by: Shelly Evans
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