How To Create A Budget

by in Saving Money

I'll be honest, it always surprises me when I find out that our friends and families don't keep track of the comings and the goings of their money. In this economy, it is extremely important to know where their money is going and how to save a few more bucks each month. You need to know what you are spending before you can start saving for a rainy day fund, college or just making your mortgage payment.

If you have never put together a budget before, I does take time and effort. It is something you have to keep doing every month. However, the end result is worth it and can allow you and your family to make financial goals for yourselves.

First, figure out where you are spending your money. Account for every penny by keep receipts and writing everything down. You will be amazed on how many stupid things you spend money on. This will also help you to trim your spending and find ways to save money.

Next, figure out how much money you have coming in monthly. This number should be your take home pay. This also include tips, child support, investment income, etc.

The most time consuming part is this next step. You need to itemize, categorize, and organize. Take all of your notes and receipts and categorize your spending using a spreadsheet with all your expenses in different categories: Household Expenses (Rent/Mortgage, Utilities , TV, Internet, Telephone, Cell Phone); Food (Groceries, Lunches, Restaurants); Transportation (Car Payment, Insurance, Gas, Parking, Tolls, Maintenance/Repairs, Public Transportation); Healthcare (Doctor; Dentist; Prescriptions, Insurance) Personal Items (Clothes, Hair care; Beauty Products; Cleaners); Entertainment (Music, Dates, Vacations, Movies/Games/Concerts, Books/Magazines/Newspapers, Hobbies); Savings & Investing; Education (Books, Tuition, Fees); Gifts and Donations. Now, you can make these categories more or less broad. You have to make them work with how you live. There are software programs out there that will make this much easier. (I personally use one.)

Once you know what you are spending every month and what you have coming in, you can next set up financial goals. Find ways to cut spending and set limits on things and you'll find you have extra money for that vacation you have been wanting to take. One of the most important financial goals to make is to save a certain dollar amount each month and tart an emergency fund if you do not already have one.

Lastly, you need to do this every month. You can update your budget as expenses or incomes change. Once you achieve your financial goal, set another.

Hopefully, this has helped you set up a budget for yourself. Are there any tips that help you set your budget?

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About the Author - Lisa Martin

Lisa Martin is a full time work at home blogger and a social media consultant. Her blogs cover a wide variety of topics including travel, cooking, product reviews, and what is going on in her daily life. She has been interviewed by the Chicago Sun Times, The New York Times, and The SouthTown Star. You can read Lisa’s blog at My Thoughts, Ideas, and Ramblings.


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