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Friday, February 27, 2009
Most people seem to be afraid to budget. Even just the word 'budgeting' makes them nervous and cringe. To them it means living a lesser life while doing more work. They think budgeting is hard and will take away from them the things they love in life. They think they could never budget because it is just too difficult.
Is it really hard to make a budget? It can be, but if it's done right with the right tool, it can be a breeze, and it can be just as easy to follow it. Before you start budgeting, you need to know how much money you normally make and normally spend on a regular basis.
For most people, it's very simple to calculate income because they only have one salary, but also include any other income including interest on a savings account or CDs, dividends, capital gains, royalties, tips, and all other income.
Next, do the same with your expenses. Write down everything you spend money on including your rent or mortgage payments, property taxes, utilities, food, car payments, your daily coffee, and anything else.
Total up these two amounts and subtract the expenses from the income. If this number is zero or very low, you need to budget in order to save more and to get out of any debt you may have. If you get a negative number, that is very bad because it means you are going into debt.
If you have a negative number and are going into debt, you are probably using a credit card to pay for the excess. This must stop and can be controlled by a budget. If you have a large positive number, you are in a great position. You might already be budgeting! By tightening up your budget or creating one if you don't already have one, you can reach your financial goals even faster.
Start budgeting using software, spreadsheets, or a simple notebook and pencil. Plan out how much you will spend each month on each item. Be as specific as you can and you will make the whole process much easier for yourself. Budget specifically for entertainment, books, clothes, etc.
When you start budgeting, you will find out that it is not as hard as you thought. The longer you do it, the easier it is. Keep at it and you'll make a habit and you'll find ways to be frugal with the things you don't care for so that you can buy the things you really want.
Is it really hard to make a budget? It can be, but if it's done right with the right tool, it can be a breeze, and it can be just as easy to follow it. Before you start budgeting, you need to know how much money you normally make and normally spend on a regular basis.
For most people, it's very simple to calculate income because they only have one salary, but also include any other income including interest on a savings account or CDs, dividends, capital gains, royalties, tips, and all other income.
Next, do the same with your expenses. Write down everything you spend money on including your rent or mortgage payments, property taxes, utilities, food, car payments, your daily coffee, and anything else.
Total up these two amounts and subtract the expenses from the income. If this number is zero or very low, you need to budget in order to save more and to get out of any debt you may have. If you get a negative number, that is very bad because it means you are going into debt.
If you have a negative number and are going into debt, you are probably using a credit card to pay for the excess. This must stop and can be controlled by a budget. If you have a large positive number, you are in a great position. You might already be budgeting! By tightening up your budget or creating one if you don't already have one, you can reach your financial goals even faster.
Start budgeting using software, spreadsheets, or a simple notebook and pencil. Plan out how much you will spend each month on each item. Be as specific as you can and you will make the whole process much easier for yourself. Budget specifically for entertainment, books, clothes, etc.
When you start budgeting, you will find out that it is not as hard as you thought. The longer you do it, the easier it is. Keep at it and you'll make a habit and you'll find ways to be frugal with the things you don't care for so that you can buy the things you really want.
About the Author:
Setting up a household budget is not difficult . Once you get the hand of it, it's easy. Use budget software and it's even easier!
posted by Credit Counseling at
2:14 AM
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