Making A Budget

Smart Ways To Save Money

Just as important, once you know how to create your budget, you'll be able to use it as a financial base to help slash your bills.

Not only will creating a personal budget provide you with financial peace of mind, but it'll ensure that your finances are organized and trackable.

When it comes to smart ways to save money, I cannot stress enough how important this budgeting tool is. It's the essential foundation to your financial well being.

Household Budget Planning

How To Make A Personal Budget

You can also access these excellent FREE sample household budget forms.

There are software packages on the market for making a budget, but keeping it simple and getting the worksheet together to help you get your finances in line is what's key at this point.

Preparing A Household Budget

1. List your monthly income. Add up all your consistent monthly sources of income such as wages. I say consistent because, dare I say, other sources of income, such as child support or cash from outside jobs, etc. may not consistently be reliable sources of income.

   For your benefit, your budget should be a money management tool that's realistic and you can rely upon.

   Also, please make sure you list your actual take home pay (net pay), not gross pay as income.

2. List your monthly expenses. I know, this step isn't the fun part in making a budget, but it is sooo important.

   So how do you do this? Well, fixed expenses, such as a fixed mortgage payment, rent or car payments will be easy to list on your monthly worksheet because the dollar amounts are constant each month.

   However, expenses that can vary from month to month, such as groceries and utilities are a different ball game.

   Solution - you need to figure out what your average monthly expenses for these variable costs are. So pull out your bank statements for the past year and make a list of all of your expenses, whether they're fixed or variable costs.

   For your variable costs, you can calculate your average monthly expenditure by adding up each expense and dividing by 12. For example, if your spending $6,000 a year on utilities, then your average monthly expense for utilities would be $500.00.

3. Calculate your net figure. Total up your monthly expenses and subtract this number from your monthly income. If this net figure is positive, then your income exceeds your expenses and you can put this additional money towards paying down debt and/or investments.

   However, if the figure is negative, you're spending more money than you're taking in. If that's the case, don't be discouraged - see the next steps.

4. Adjust. You will need to cut back on monthly expenses that are flexible, e.g.groceries, eating out, impulse shopping, department store shopping etc. In other words focusing more on what you need instead of want.
5. Eliminate wasteful spending. Here are some tips to help trim the fat from your monthly budget by again focusing on needs instead of wants.

   Basic cable (or dish) instead of the premium package

   Shop for a cheaper cell phone plan, e.g. a family package

   Cut back on eating out - pack your lunch

   Running up to the store for snacks

   Paying for a coffee every morning at a Starbucks

   Cut back and eliminate using credit cards

   Drive used, instead of new cars

   Drive more fuel efficient cars

6. Making a budget Advanced Stuff. If you want to really get serious about tracking and eliminating wasteful spending, then for 1 month, record "every" transaction you make with your money. Carry a notepad and keep all your receipts in your wallet or purse.

   For your benefit, please be specific. In other words, you'll want to record the specific item you shelled out cash for as opposed to "I spent $50.00 at Wal-Mart." This is because specific spending will enable you to zero in on wasteful spending.

   For example, when I implemented this years ago, I was shocked at how much money I was burning through on trips to the local 7-11 for snacks and pop.

   The amount of money I found I was spending on eating out was also an eye opener. I also found I was overspending on extracurriculars, e.g. playing in a baseball and bowling league, going out to the movies too frequently etc.

   Also, take a look at your expenses as a percentage of total expenses and focus on eliminating or paying down the larger expenses, e.g. car payment. This will help you prioritize an attack plan to reduce and eliminate debt.



Making A Budget

Budgeting Personal Finances

You can have a fantastic lifestyle by making use of a good frugal plan; and making a budget is an excellent foundation towards achieving this.

It's not a bad idea to also re-evaluate your budget at least once a year. My wife and I had to adjust our gas figure up when gas prices went to the moon. We also adjusted our auto insurance figure down after we shopped for a cheaper insurance carrier.

The key with budgeting is to stick to the plan and continue to focus on ways to reduce your monthly costs and adjust as necessary.





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