With all the upheaval that’s been going on in our economy, more and more people are determined to get their finances under control once and for all. For most people the first step is to make realistic personal budgets. While it isn’t hard, there are several things you will need to keep in mind when you go through this process.
Here are some ideas to get you started on your budget:
- Set aside a block of time and a quiet place to work. Gather all your bills such as utility, grocery, insurance, and loans. Also gather up your latest check stubs (include the check stubs from your spouse too if they have one). If your check amount varies quite a bit you might want to take the check stubs from a few months and average them to get a more realistic monthly income.
- The next thing you will want to do is to make a list of your ‘non- bill’ expenditures such as dry cleaning expenses, money for lunch, gas for your car, prescriptions, etc. The point is to get an accurate idea of what you spend every month. Another way to make sure you don’t miss anything is to look back over your checkbook register for the last 2 or 3 months for miscellaneous expenses that tend to show up fairly often.
- Once you’ve got your income, your fixed bills, and your non-fixed bills you can calculate exactly how much you can spend every month and how much you can save. You can use some computer software for this process if you want, or you can just write it all down in several columns. It doesn’t matter as long as you include everything that you spend on a regular basis and that it makes sense to you.
- Once you’ve got your ongoing expenses covered you will be able to see in black and white how much money you have left over every month to put into a savings account and for personal discretionary spending. If, you find that you don’t have enough money for a savings account, or if you find that you’re not paying all your bills every month because you don’t have enough money, it may be time to look over your list of expenditures more carefully to see if there are things you can be cut out of your budget.
Most of us ‘waste’ money on things that we really don’t need. If you find that your current spending habit doesn’t allow you any extra wiggle room, you may want to change some of your spending habits so you can put at least a little money in a savings account every month.
- You may find after a month or so that you forgot to put some things in your budget or that you over or under estimated some aspect of your budget, all you have to do is tweak it and make the appropriate changes. Remember, once you’ve got a realistic budget in place you need to stick to it, but in order to be able to do that your budget has to be realistic first.
Personal budgets are the only way you can accurately keep track of your financial situation. If you don’t keep an eye on where your money is going you may waste a lot of it. Take control of your money and you’ll be pleasantly surprised at how much more of it you’ll have.
