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How Do I Make A Personal Budget?
What does it mean to make a personal budget? Well, it’s a financial plan you have made about a specific amount of money that you will spend for purchasing a particular item. A personal budget includes all of your income and expenses that you have on a monthly basis. When you have your budge you have a financial plan which determines the amount of money that you will spend on various expenses each month. Your budget will also take into account your income, debt outstanding, savings for retirement and the amount of money you have for emergencies.
Your budget will allow you to understand your personal finances. It will also assist you in understanding how you are spending your money. Making a personal budget will also help you to determine whether or not you can afford to purchase a home, vehicle or possibly a computer that you may have wanted for a long time.
Why should I Make A personal budget? Well, that’s a good question, I’m glad you asked. A budget helps you keep track of your money, by helping you determine how it comes in and goes out. As a matter of fact, you will discover by creating a budget, that you may be spending money every month on something you really don’t need or want. By creating a personal budget you will write down all of your expenses and your income. You will be surprised to see where your money is going after tracking your expenses for a month. How do I get started with creating my own budget? You can start by writing down all the income that you receive on a monthly basis when you make a personal budget. This income would include money from your job, alimony, child support, social security and any other income you may receive. After writing down your income, put down all of your expenses which would include your rent, mortgage payment, electric bill, phone bill and any other monthly expenses you may have. What if my income does not cover my expenses each month? You should consider adjusting your expenses by selecting some or all of the following options: consider reducing your entertainment expenses such as not going to a movie every week and eating out less often. You could go two days a week for a latte at your favorite coffee shop instead of five days and consider canceling your prime movie channels that you may not be watching. Is there a certain amount of money that I should consider spending on household expenses when I make a personal budget? Of course, the amount of money you spend on certain expenses will depend on where you live.
Here is a general guideline on what percentage of your income should be allocated for these particular expense areas: housing 31%; transportation 17-20%;food 10-15%; insurance 5%; savings & investing 10-15%; health Care 5-8%; clothing 5% and entertainment 5%. Patience is a virtue. I know you’ve heard this before, but patience is important when it comes to your personal budget. Hold off on making a purchase until you have planned for that expenditure. You'll be glad you did in the long run.
Get your copy of Personal Finance Tips For You for $12.99 to learn tips and information on the following: how to stay on track of paying your bills on time; determine if you should pay yourself first; discussing finances before marriage; and many more personal finance tips for you inside this book.
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