Creating Your First Budget

More than ever before your financial success depends on making and keeping a budget.  Making a habit of budgeting your money and sticking to that budget is vital to your financial well-being today and in the future. Frankly the transition from having no budget to having and sticking with one is going to be hard at first but, as you get used to spending only what your budget allows you’ll not only get accustomed to it you’ll also see that not having a budget really isn’t a good idea. To that end below you will find a guide to getting started with your fist budget.

Creating a list of ALL your current expenses is the 1st step on the road to having a real budget. Unsecured debt, your mortgage, cable, energy and insurance payment must all be factored in, as well as car payments, food and so forth.  The more detail you go into the better when starting out to get an idea of the true amount of money you spend every month on ‘regular’ bills.

You should also remember to include as an ‘expense’ some money for savings.  Experts will tell you that it should be 10% of your net income but whatever number you choose make sure to put it aside every month.

Tallying the total amount of income that you have (including your spouse’s if you’re married) is the next step.  If your income varies try and get an average from the last 6 months to use. You should have kept the totals from the expense part and now you can compare them to the income part.

If you spend more than you make don’t freak out. Many people are in this same position and thus the need for a budget. If you make more than you spend consider yourself lucky and do your very best to keep it that way.  With a well-planned budget however you should be able to join this lucky group.

The next step is to start looking at your expense column (even if you make more than you spend) and find out where you can ‘trim the fat’ so to speak. Non-essentials like restaurants, gym memberships that aren’t being uses, entertainment like movies and shows, eating out during the day and even snacks should be looked at as possible sources of cutting back.  Check out your phone and cable service too and see if maybe you can get by with a plan that costs less.

Next (and remember this is a simple budget) decide which of these expenses can be trimmed and which can be tossed completely and start doing it.  Then decide exactly how much you wish to spend on what’s left that can be tightened (food, entertainment and so on) and put a precise amount of money aside to be spent and nothing more. Do this every month and before you know it you’ll be sticking to a budget and saving more and more money every month.  Good luck!


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