Making a budget is easy but if you don’t know where to start, look no further: we have explained the basics for you.
Always using cash loans to make ends meet at the end of the month? Maybe you need to rethink (or start thinking about) your budget. Budgeting is an essential part of any household planning, whether you’re a single guy or a mom of five. If you don’t have a budge, here’s how to get started.
The goal of a budget is simple : To spend less money than you make to avoid getting into debt.
Spend some time recording all your incomes and expenses on a sheet of paper or computer spreadsheet. If you don’t have a stable income, estimate for every week or month.
Write down everything you spend, keeping in mind the most important expenses like rent or mortgage, food and loan payments. These things probably never change from month to month, so it’s a good place to start. Track everything else for about a month, including restaurants, movies and coffee shops.
Look at your expenses
After tracking your expenses for a month, divide them in necessary and optional. Again, the necessary ones are those that keep a roof over your head and put food in your mouth (excluding restaurants).
Optional expenses are things like coffee, that new pair of shoes you didn’t really need, fast food and lottery tickets. There are other variable expenses like cell phone bills, gas and car repairs, clothing, etc.
Try to balance
If you’re earning more than you spend, you don’t have much of a problem (this assuming that you don’t use your credit card to cover necessary expenses). It might be that you make more money than you need or are just really good at keeping your expenses in check. Good job!
However, if your expenses are higher than your income, you need to start thinking about what you can cut or how to increase your earning. Can you balance your budget by eating home most nights and bringing a lunch to work? Can you skip on the Starbucks and bring a mug with you on the train?
Adjust as you go
Of course, there will always be unplanned expenses and emergencies. That’s why using a computer spreadsheet is so useful: you can add in unexpected expenses and see what it does to your budget right away.
Plan ahead for a few months but always adjust the numbers in your spreadsheet at the end of every week. If you plan 100$ for food every week but only spend 80$, this adds 20$ in your pocket.
Budgeting can be like dieting: if you deprive yourself for too long, you might just end up binging and spending more than you can handle. To avoid this situation, allow yourself some pocket money or save up for that awesome pair of boots or that new TV.
It’ll be much more rewarding to buy luxuries through saving rather than risking the debt collector calling you for a purchase you couldn’t afford in the first place. If you have a good budget, this likely won’t happen to you!Google+