July 23, 2008
Creating a Personal Budget
By Greg Wilson
Money doesn’t talk - it walks. Designing a personal budget is the only thing that can address every one of the questions that everybody wants the answers for but that no one wants to conquer. A personal budget is tedious at the outset, but once it is in place, you’ll be glad you did it.
Let’s start with the basics. A personal budget is the complete list of expected expenses for a particular period of time, say on a monthly basis. This includes salaries from work, child support, alimony, income from real estate investments, and pensions. All of these sources make up your monthly income that can be used towards household expenses.
Run a total. This is the amount you have to start with. You probably can’t believe you have that much money coming into the household when you open your wallet at the end of the month and nothing but moths fly out.
At this point, we move on to dealing with the debt. Name your monthly expenses. The liabilities part include mortgages, monthly utility bills, payments of various loans, child support, alimony, credit card payments, child care expenses, entertainment bills, policies and insurance payments. If the price of these bills stays the same each month your budget will be easier to figure out.
You also need to set aside some money for variable expenses. Clothing, food, gas, medical co-pays, and entertainment fall in this group. Going out to see plays, movies, or to enjoy dinner are types of this kind of entertainment. Monthly cable television bills would go in with the recurring bills.
Add up all of the recurring debt and subtract that from your income. The remainder will create monthly allowances for the variable expenses. Money sent to the saving account every month can be recorded as an expense by the people. If you are having trouble saving, this is the perfect time to allocate an amount for that purpose.
Keep a log such as a check register, or use finance software aids in tracking where the money goes. There are cases where your money just disappear through the ATM machine without you knowing the reasons behind it. It is a guaranteed method for destroying your budgeting efforts.
Personal budget creation is an activity for the entire family. Parents can garner support from others. Ensure every person here gets involved with the end result. Of course, every person will be governed by it in one way or another. Children habits are implement in our daily life
Budgets are not quick fixes. Just like any other habit it will take time to become second nature. Before it is all said and done, you may find that you have to change the original budget several times until it fits your lifestyle. A good budget includes a little flexibility, but requires discipline.
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