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
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.
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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)
Entertainment (Dining/Eating Out, Movies, Sports/Recreation)
Insurance (Auto, Health, Homeowners)
Loans (Auto, Mortgage, Student)
Taxes - Property
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.