subject: Don't Be Afraid Of Making A Budget [print this page] There are things we can do to help ourselves eliminate being in this situation. There are five basic things you must consider and evaluate when making a budget to help you never "wonder" where your money went ever again.
The first is to determine monthly take home income. Whether you are a single individual or a family, you need to determine how much money is being made each month. Once this is determined the family or individual knows how much money there is to work with.
If we find ourselves spending more than we make, then some decisions need to be made. There are basically three options: get another job to subsidize your income, get more education or training to get a better paying job, or decrease your spending. Each option should be considered carefully by the individual or family.
Then you need to understand your bills and expenses. Account for your bills and the money you spend during your daily activities. This can be done by saving copies of your paid bills and recording your daily expenses in a small notebook. Once or twice a month take inventory of your expenses.
Daily expenses would include all money paid out of pocket except your monthly bills. Tracking your expenses is also very important. There are computer programs to track your finances, a simple spreadsheet can work or even pen and paper. A brief example will help in better demonstrating this point.
For instance, you can make categories like food, insurance, auto, fuel, clothing, savings, children's expenses, etc. You can come up with whatever categories fit your needs.After you have determined what your monthly take-home income is, you need to divide it up between your categories. The total amount placed in all the categories needs to equal your take-home income.
The key to making the tracking effective is to enter your expenses regularly and stay within the amount allotted in each category. If your track your expenses effectively, in just a few months' time you will find areas where you might be able to make changes and save money. You might notice how much money you spend on frivolous expenses.
A big part of any budget should be setting aside money into a savings account. Money in a savings account provides a little cushion in case of an emergency, loss of employment, or disaster. The amount that should be set aside in a savings account will vary depending on your circumstances.
The important thing is that you start. Over time your savings account will grow larger and accrue interest. As your employment circumstances improve, you may want to increase the amount you are putting into savings.
Just a side note about saving for retirement. If your employer has a 401K program, it would be beneficial to look into the program. Many employers have a matching program where they will match a certain percentage of what you contribute.
If your employment does not have a retirement savings plan, then you may want to look at budgeting money for your own long-term savings plan. This plan could be investing in the stock market or an individual IRA. You may want to seek advice from a financial expert.
Now you need to practice spending less than you make! This has been a age-old problem. People in general have a tendency to spend more than they make. It takes strength and inner commitment to live within one's means and save for a rainy day.
A simple rule of thumb is to spend less then you make and save as much as you can. This practice does not have to be done overnight, but steady improvements will yield great financial dividends. Setting up your budget takes time and effort, but can be very rewarding. Getting in control of your financial future can be done with the help of a budget and some personal discipline on your part.
It doesn't take long to get into this habit and you might find yourself being very relieved to know exactly where your money is going and that you have started saving money for emergencies.
by: Jack Landry
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