tips on creating a budget

By Lena / November 8, 2012

Tips On Creating A Budget

If you want to manage your personal finance effectively, you have to create a budget. A budget is a way of determining how much you are making and spending and the things on which you are spending. A good budget is one that has expenses less than the income. Each family’s budget is different according to the different types of needs. Here are some tips to help you create a good budget for you and your family.

First of all, you will need to figure out how much money is coming into your household. Income includes the money earned from the employment of you and other members of your family. It can also include income from other sources, like rental income. There can also be a special category for one-time money gifts.

The next thing you need to do is list down all of your household expenses. This includes everything that you have to pay for on a regular basis as well special expenses. Household expenses include mortgage or rent, utilities, insurance, and home repairs. Food expenses include groceries and meals eaten at restaurants. Transportation costs can include your car payment, gas, and repair costs. Other expenses include medical insurance, education costs, expenses on recreational and entertainment activities, clothes and the cost of things that need to be purchased in the normal course of the day.

As you are spending money, write down what you are spending on. Do not forget to include the small incidental costs that occur whenever you buy that cup of coffee or snack. Try to be as comprehensive as possible in what you are spending each day. Keep a detailed record of this for a month. You will be surprised at how the little things that you spend on everyday can add up to big dollars at the end of the month. These are usually good places to begin cutting back.

If you are spending more than what you are making, or if you want to save more money, make some goals as to what dollar amount you would like to save per month. Look over your budget of income and expenses, and start cutting back on expenses that are not necessary. You can start with your daily cup of coffee at the coffee shop. Instead of buying it every day, cut back to a couple of times a week, and bring your own coffee to work on the other days. The same can be done with dining out. Dine out less frequently and prepare more of your own meals at home. Pack a lunch instead buying it each day. All of these adjustments can add up to big savings at the end of the month. The key is to make your goals attainable.

Once you have made your budget, it is important that you stick to it. If you have spent your monthly allowance for dining out, then eat at home for the rest of the month. If you have already spent your clothing allowance for the month, then refrain from buying any more apparel items until the next month. If you have the discipline to stay within your budget, you will not get into the danger of overspending, and you will be able to save something.

In order to control your finances effectively, you have to develop a sound, realistic budget, and stick to it. If you follow some of the suggestions in this article, you will be able to improve your financial health in no time.

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Lena

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