It’s a good idea to have a budget set up for yourself. A budget is simply an outline or plan or what to do with your money. Budgeting allows you to set aside necessary funds for particular purposes, such as rent, food allowance, clothing, savings, car note, monthly bills, etc. Budgeting is basically estimating monthly expenses based on bills and the cost of living from previous months, and allowing for the unexpected.
The main purpose of budgeting your money is to be aside or save money for expected costs as well as unexpected situations, such as new vehicle tires or doctor visits that health insurance might not cover. Maintaining a budget helps you to achieve your financial goals and to make decisions ahead of time of where money is to allocated.
The first step to setting up your budget is to determine your monthly income and outgoing expenses. Then determine bills or expenses that occur throughout the year but not on a monthly basis, such as car insurance that might be paid twice a year rather than monthly. Afterwards, determine situations that you might need to save money for, such as clothing, furniture, new tires, possible future doctor bills that health insurance might not cover, or a new home.
As you begin to set up your budget using the above, you will begin to see where your money is going each month. Some things you can cut back on and do without, and some thing are necessary. Determine what you need to live on verses the extras. Always be sure to have a place to live, food to eat, be warm, and be able to pay your bills, in that order. Prioritize your expenses, on a monthly basis. By keeping receipts and writing down what you spend, where you spend, and what you spend money on, you will be able to make a workable budget and be able to budget better. Knowing where your money is going is a top priority in better budgeting.
If your monthly take home income is $4,000 you would want to subtract all of your monthly bills and expenses from that amount. Then you would want to subtract money for situations that you are saving for, such as birthdays or holidays, a vacation, etc. Remember to always allow for the unexpected!
Some tips for better budgeting:
- Plan for your lifestyle and situation. What works for another person might not be for you or work for you. Plan for your needs and the way you live.
- Pay attention to your spending habits. When you first make your budget, you might have to adjust it and tweak it. Once you get it set, stick to it. There’s no point in having a budget if you don’t use it.
- Remember that some things are necessities but some things are luxuries. Know the difference! Always spend on what you need or must have ahead of what you want. Wants can wait!
- Be frugal. Frugal means living within your means. Don’t spend money that you don’t have. There are many ways to have fun and not go broke doing it.
Managing your money better will give you greater control of your finances. Budgeting is something that just about anyone can do and stick with. Setting up a budget is one of the best money saving things you can do. Saving money by budgeting better and implementing a budget into your daily life is something that will greatly benefit your finances.