MONEY AND FINANCE

Start Budgeting Your Money Better

Start Budgeting Your Money Better

Everyone has heard the word budget. Unfortunately not everyone knows what a budget is or its intended purpose.

A budget has been defined as an itemized forecast of an individual’s income and expenses expected for some time frame in the future. For most people, an individual receives income in the form of a paycheck every two weeks or once a month. Hence, the time frame becomes every two weeks or once a month.

Likewise an individual’s expenses come in a time frame. These are usually monthly. Such items as car payments, mortgage payments, loan payments, utilities, etc are all paid monthly. Items like groceries, school supplies, clothes, etc come in a much shortened time frame.

Regardless of the time frame, these items must be paid for. That makes it imperative on you to have a sensible method to account for these items. The budget is that sensible method.

It doesn’t take a rocket scientist to know that if you don’t budget your money, you’re inviting unnecessary debt into your life. Not only unnecessary debt but stress and grief and possible bankruptcy.

You might want to make a hard and steadfast rule that says you won’t spend any of your paycheck dollars until you’ve worked out your budget. That way you have your current financial snapshot right in front of your eyes.

Some of the items almost all of us have in common are:

• Rent/mortgage
• Utilities
• Vehicle payments, insurance, maintenance (e.g. oil changes, tire rotations)
• Debt (credit card payments, student loans, doctor’s bills)
• Gas
• Tuition, school supplies
• Food/groceries
• Health insurance
• Miscellaneous

As mentioned above, a budget allows an individual to carefully look at how much money they are taking in during a given period as well as how much money is going out during this same period. The budget becomes the tool that allows a person to figure out the best way to divide it among the variety of listed expenses.

Given this is the case, a person can designate an appropriate amount of money to cover the fixed expenses – rent, car payments, utility bills, mortgage payment, etc. Next, if they don’t know what the variable expenses will be, they can make an educated estimation for those items – groceries, clothing, entertainment, etc.

It stands to reason a person keeping track of where one’s money goes will be less likely to overspend. Not only less likely to overspend but more likely to meet set financial goals. In other words, a budget serves to not only let you know your personal financial situation at a glance but set a plan to be where you want to be in your financial future.

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