How to plan your budget

From ArticleWorld

Because before you can plan your budget, you must come to understand where and how you earn and spend your money. The first step is monthly and weekly budgets, which are essential to organizing your money.

One must first get a handle on their weekly and monthly budgets before doing any financial planning. Once that is done, deduce where and how you can earn and spend your money. To help you with this, follow the steps that will show you how to calculate, accurately, your regular income, and regular outgoings.

Organization

First, you must estimate your regular income, this figure can be either weekly or monthly. Second, list where your income comes from and in what amounts, if married, include your spouse. Third, you need to ask yourself some questions: Does your job give you regular overtime or a bonus? If so, can you depend on it, and is it guaranteed? Do you have bank statements or pay slips that can help you calculate the average amounts of money that you receive? When answering these questions be as accurate as possible, and try to reach an average NET income. Net income is your income after taxes.

Next, you must calculate your regular outgoings. To do this you need to carry around a pen an a small notebook, for about thirty days, whether you want to or not. During the next thirty days, jot down how much every item you brought was worth. Also, write down what the item is for, and where did you spend it. Be warned, that most of the purchasing will be on large, regular items like rent, utility bills and grocery shopping. However, there will be a lot of small regular purchases also, like newspapers, snacks and drinks.

After all this work, you will have two calculated numbers. One number will be money coming in, and the other one, will be money going out. Look at the two numbers and if your spending is exceeding what you make (income) make a decision to change it, and act quickly.

Things to know

You may have a desire to quickly start a budget, don’t, quash that desire. You need to realize that it will take you about thirty days to completely understand where your money goes in a week. When the thirty days have passed, take a careful look at your money to see what you spend it on. Then ask yourself, “If what you spend it on was a good use of cash.”

Budgeting

Budgeting is a tool that is underrated, and rarely used. Most people do not bother to budget. However, budgeting can help a person accumulate wealth, but it will also reveal a lot of things about your money. Once revealed, it will help you to make a better decision on what you really want to keep and what you don’t. An important realization that will have a lasting impact on your financial situation.