How To Budget

Budgeting is managing your money. When you budget your finances, stay out of debt, save, and watch spending, your financial stability brings peace of mind.

A good budget that is followed gives peace of mind and financial stability. Just the opposite is true when one lives with overspending and debt Studies have shown that one of the main reasons for marital strife and divorce is the managing of money. Establishing good money managing reduces stress. Following a budget takes discipline but is well worth the effort.

A person can always spend as much as he can earn. Peace of mind comes from being able to control your money whatever your income. Living within your means brings peace and contentment. If you make your standard of living such that you always have some money left over, your life will be much more content. Debts and obligations that you are not able to meet bring strife, not to mention contention.

There are many different ways to develop a budget that will work for you. Whatever budget you decide upon will take discipline to make it work. If your budget is a family affair, it will need the commitment of each person involved or it will fail. Each person will need to be committed to the success of the budget decided upon. From time to time, you will need to reevaluate your budget, making sure that it is working. Changes in the family such as income, size, ages, and needs will change your budget.

In planning a budget it is necessary to see just how much money is coming in. If your income is steady a budget may be used for a longer period of time than an income that isn't steady. For example, occupations such as a realtor may not know how much will be incoming in the future and will need to budget monthly. For a steady income, list all places where you receive money. List all income and come up with an amount.

A budget can be made for one week, biweekly, monthly or yearly. Monthly is the most common budget.

Knowing how much income you have is the first step. Now decide what is important to you and to your family in terms of spending. If possible, enlist all family members for input. Think of what you want to do now and in the future. Think of what has to be done in order to live. Decide together what your short and long-range goals are. What do you want to have happen in regards to money? How will you get there?

Make a list of the things that you need and want now and in the future. Find out to the best of your ability what the items on the list will cost and place an amount next to the item. Place this list aside.

The next step is to find out how much money you are spending. If you have not been using any type of budget, you will need to write down your spending for at least a month. Make a chart with basic headings such as food, clothing, housing, health, education, contributions, transportation, personal, recreation, cleaning, help, gifts, insurance, savings, taxes, dues, and debts. Each day you will need to chart how you have spent your money that day. If there are any payments that are due bi-monthly or any time other than monthly, make sure you divide the payment and add what the monthly amount will be to your chart. List everything that you spend. It is very important to get a true picture of your spending.

Now that you know how much money is coming in, your desires, and how much money you are spending, you are now ready to figure out a workable budget. Going back to your spending chart and needs list, find out what your needs are and write those costs down. These would include items like your house payment, utilities, phone, and insurance. If you have found that you are spending more money than you are making you will need to find areas to cut down. These areas can include food, gifts, and recreation. If you find that you are living well within your means, it is time to look at your wants list and decide which desires can be included in your budget.

Saving is a must. If you are financially strapped and cannot see where you could possibly save a penny, begin by saving all of your change. Children have gone to college on dimes and nickels saved by parents and taken to a bank early in life. Even a modest interest will add up over the years. See where you can save and do it. If there is a little extra and you are certain that you will spend it, take it immediately out of the budget and place it in a savings account until it accumulates enough to be put into a low risk investment.

Do NOT allow yourself to get into debt for wants. Needs such as a home and education may require you to go into debt but be careful. Interest never sleeps and can overtake your life. If in credit card debt, get out! Live within your means. You will find peace and contentment by making and using a budget.

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