Make a Budget and Keep It February 22nd, 2010
It is easy to say that you are going to make a budget and stick to it, but it is hard to do in practice. This will not protect you from an emergency, but it will keep your daily spending in check. If you make an unrealistic budget for example, you will spend too much no matter what. The best way to fix this is to look at what you are spending and to cut it down to a more manageable amount taking into consideration how much you make. The best way to start this is to take a realistic look at what you are spending money on during the week. My suggestion is to take a small notebook and carry it around with you everywhere. Note down in it the date, what you bought, and how much it cost for every thing you spend money on. This includes things you pay cash for, and bills you might pay, like your credit card bill. Also note down in there if you have to take out a cash advance loan, or if you have to pay back a bank loan of some type.
At the end of two months of doing this, look at it and add on to there anything you have to pay that is an annual, semi-annual expense or something else you haven’t added on there that you normally would have spent money on. These can be things like car registration and maintenance, tax preparation fees, insurance payments, property taxes, and even seasonal things like gifts for birthdays and holidays and vacation money. Now is also the time to note down your income, taking into account regular bonuses, alimony or any other sources of income you may have including your pay check.
Now determine what categories each of your expenses fall under. Anything that is entertainment can come out of the list for now. Now, list the twelve months out and take note of how much money for each of the remaining categories you will need. So if rent is $450 and utilities are $150 your loans are $300 and food is another $100 for each month, note that down. Also note down the things that don’t happen regularly like property taxes and adjust your total for the month that is due. Now determine how much each month you want to save, putting a note under each month that this is how much will go to your savings instead of your spending. The difference between what you make and the sum of what you have to spend and what you want to save is what you now have for things like going out to restaurants. If you stick with this, it should keep you on track, but make adjustments as necessary.
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