Basic Guide to Manage Your Budget

A budget simply shows how much money you have coming in and how those funds are spent. Regardless of economic standing or which generation you fall into, every consumer can benefit from creating and managing a budget. A budget gives people a sense of control over their money. The problem is, not all people could manage their money wisely.

There are a few basic rules about controlling your budget to improve your financial life:

• Spend less money than you earn. If you spend exactly as much as you earn every year, you’ll never be prepared for emergencies or major life changes.
• Always plan for the future. Establishing an emergency fund will allow you to deal with unexpected problems. like car repairs or medical bills. Also, having a retirement plan will ensure you have income when you’re unable to work anymore.
• Make your money make more money. Invest in things that will earn you more money than you had before.

These steps could help you to manage your budget:

1. Set Goals

There are two types of financial goals: immediate and long range. Immediate goals focus on using your money today, while long-range goals deal with saving and spending over decades. Immediate financial goals include covering current expenses, like rent payment, car loans, utilities bills, child care, food, cell phone and household supplies. Long-range financial goals could also include retirement savings, investments and charitable donations.

2. Calculate Your Income and Expenses

Start by making a list of your monthly income sources, including your salary (after taxes), any bonuses you incur on a regular basis, and child support or alimony payments. If you don’t know the exact amount, you can use an estimate. Once you have your numbers, add them up. The next part is counting your expenses:

• Fixed committed expenses: These have a fixed monthly amount, such as your mortgage or rent.
• Variable committed expense: These vary from one month to the next month based on need, and would include groceries and gasoline.
• Discretionary expenses: As noted, these are optional expenses and include recreation and entertainment. A gym membership would also fall into this category. Discretionary expenses often make life more fulfilling, but they should be the first expenses to go if you can’t afford the basics.

3. Analyze Your Spending and Balance Your Checkbook

The goal in budgeting is to make sure your expenses do not exceed your income. If they do, and more money is going out than is coming in, then you need to make adjustments.

4. Revisit Your Original Budget

After you’ve had a chance to monitor your income and expenses for a month or two, you will be more aware of areas that need adjusting. Make adjustments, but always balance inflows with outflows.

5. Commitment

Creating a budget is a great step in working toward a more financially sound future for you and your family. Committing to your budget will get you there. Remain realistic, evaluate it often and don’t be afraid to adjust. Budgeting is all about balance. Don't forget to do savings for unpredictable problems in future! (eas)

Source: https://www.debt.org/ and https://lifehacker.com/

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