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You Need A Budget

The monies left over from your paycheck may appear as change after paying increased prices for food and gas.  You have no control over how much is being charged.  You do, however, have control over how much you spend.  You can either control your money or let it control you. You need a budget is the perfect tool to help you get organized and find money to save.  Changing is hard.  We all have routines and patterns that are easy and comfortable.  You can evaluate how you currently get things done and determine some needed changes.

Am I mentally ready to gain control of my money?

Am I ready to start budgeting my money?

Are there other ways I can make money?

Do I have any accounts in collections?

Do I have a habit of borrowing money?

Do I have anyone to help me pay off my debt?

Do I have a habit of borrowing money?

How long does money last after I’m paid?

How long will I owe money out?

How many accounts do I have in collections?

How many credit cards do I have?

How much money do I have?

How much money do I make?

How much money do I owe?

How much money do I need for myself?

How much money do I want for myself?

How often do I get paid?

How soon would I like to pay off the companies that I owe?

How will I accomplish my goals?

Is most of my debt credit cards?

Should I influence my family and friends to apply money management in their life?

What do I want to accomplish?

What is my credit score?

Will I benefit from this?

Will I stay committed to the plan even when it seems frustrating?

Now, do you need a budget? 

Many of us fail to see the relationship between budgeting and saving. Budgeting is a process that starts by setting spending targets that help you to stay within your means of paying for the bills. A personal budget is useful in controlling personal expenses.  Reasons for having a personal budget usually change over time. In our 20s, we focus on repaying debts or saving for a down payment on a home. We may want to budget in order to set aside several thousand dollars for a trip around the world. In our 30s and 40s, budgeting is important to help pay for our children's living and college expenses. By the time we enter our 50s, saving for retirement becomes a major financial goal.

Budgeting is the cornerstone of saving. No personal budget often means an inability or unwillingness to identify a potential source of regular savings. A personal budget imposes some discipline on adhering to a saving plan.  Some important steps in setting up a personal budget include:

Select a period to measure. A monthly budget often works best. Most of us pay our rent, mortgage, and utility bills monthly. It is also the period over which many of us get paid. If you are paid every two weeks, you can add the amounts to determine a monthly figure.

Calculate net cash flow for the period. Your personal net cash flow subtracts your cash expenses from you cash income. If you charge with your credit card, add those charges to your cash expenses. Using your credit card is only a means of postponing cash outflows. While you're at it, be sure to add the little items, like those $4 lattes and video store trips. These items easily add up to $100 or more in a month.

Keep records. Accurate records will help you to keep a history of several budgeting periods. You can string together 12 months of budgets to create an annual budget. You can use your budget records to compare actual and budgeted spending. The differences in actual and budgeted spending are called variances. Be as precise in your record keeping as you can afford to be.

Monitor and review. Your records help you to compare how well you budget. The key is to identify positive budget variances where your actual cash outflows are less than your budgeted cash outflows. These variances are a source of funds to save and invest. For example, if you budget $1,500 in monthly cash outflows but routinely only have cash outflows of $1,400, you have identified a source of savings worth $100 a month.

Save for an emergency fund. As you gradually find you can save each month, you may want to first set aside enough for an emergency fund. An emergency fund consists of three to six months of savings. An emergency fund is also called a rainy-day fund and should be used only to pay for unanticipated financial setbacks. These setbacks may include losing a job, becoming ill, or suffering the death of a family member.

Many people would like to be able to create a budget. But it can seem like one of the most difficult things on the planet to accomplish.  By understanding how to create a budget, you'll be more in control of your finances.  Use these 3 steps below to make your own monthly budget planner.

1.  Create a list of your monthly income.   

2.  Determine monthly expenses.  

3.  Figure out if your monthly income is enough for all of your outgoing expenses.

Be sure to include all sources of regular income, including part-time jobs.  Add up your numbers and write them down.  Make sure to include food, gas, clothing, utilities, and housing costs.  If you’re not sure what these are, just save your bills and receipts for the next month and you’ll have an accurate idea.  You need a budget to accurately compare your income to expenses and to identify long term saving objectives.   

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