Money : Manage Debt by Creating a Budget
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Create A Budget



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A realistic budget is your best weapon against overspending.

It's easy to get into a cycle of overspending and unnecessary debt. But there's salvation in the form of a humble money management tool — a budget. If you create a budget — and stick to it — you can take control of your financial future.

If you want to keep your spending under control, it's essential that you make a budget. A budget allows you to get a handle on the flow of your money -- how much is coming in and where it goes out. With that information in hand, you can make intelligent choices about how to spend.

A budget, or spending plan, will help you cover all your needs, wants, expenses, and saving goals. It requires three things:

Knowing how much money you spend
Knowing your saving goals
Managing your money

Think about your sources of income. Where do they come from? Paycheck? Earnings? Investments? A combination of all three? Under “INCOME,” list your income sources on the left side of the page.

Now, think about your fixed expenses. Do you have a mortgage payment, rent, car payment, insurance, or any other regular expense? Fixed expenses can also be thought of as needs. Are there any items you need to buy regularly, such as groceries or household supplies? Also, “FIXED EXPENSES” is the section where you should keep track of your savings. If you consider your savings to be a regular fixed expense, you’re more likely to stick to your saving plan.

List all the things you want to spend money on, like entertainment, eating out, and clothes. This is also where you’ll list unexpected expenses. Here's a few items to help you start your list:

Automobile Expenses (Loan, Fuel, Repairs)
Clothing
Entertainment (Dining/Eating Out, Movies, Sports/Recreation)
Gifts
Groceries
Home Care
Insurance (Auto, Health, Homeowners)
Loans (Auto, Mortgage, Student)
Phone
Rent
Taxes - Property
Utilities

A balanced budget is when your income is at least as much as your expenses. At the end of each month, compare your actual expenses to your budget. Try to keep your spending within your plan, and look for ways to cut your expenses.

Don't give up if maintaining your budget is hard for the first few months. It may take some time to set up a plan that works for you. Be flexible. If your budget is not working for you, fix it so it will.

 

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