How To Set Up And Stick To A Simple Budget

A simple budget can be the answer to your prayers, or the source of your aggravation. Its purpose is to help you to live within your means. However, if it is set up improperly, a simple budget can make your life difficult. Fortunately, all you have to do to ensure that your simple budget will work for you, instead of the other way around, is to follow these steps. Step No. 1: Identify Your Costs and Expenses. The first step in setting up a simple budget is to identify all of your costs and expenses for the month. If you are honest with yourself, an easy way to do this is to use your pay stubs for your income source and your billing statements and receipts to determine your expenses. If you use cash or credit cards a lot during the month, or a lot of ATM withdrawals, then you may want to use a journal to track your spending during a one month period. This will give you a more accurate picture of how much you are spending each month. (You will also want to make a note of period expenses like insurance payments or property taxes.) Step No. 2: Identify Costs That Can Be Reduced or Eliminated. This is a great time to eliminate or reduce unnecessary expenses. Shop around for better rates on utilities, phone service, cable, Internet access and products. Also, identify expenses that are for items or services that you don't need. For example, if you have a gym membership that you aren't using, don't renew your membership. Debt interest is also a big expense that, in many cases, can be avoided. Check your credit report out and investigate your credit to lower payments and interest rates. If your credit report isn't in the best of shape, seek out credit help either online or with a financial advisor. Step No. 3: Set Up Your Simple Budget. The first part of your budget is your income. List your regular wages, child support, alimony, dividends and miscellaneous income that you receive. The next part of your budget will be made up of necessary expenses like rent or mortgage payments, utilities, food, transportation and insurance. These are costs that you have to pay every month. Subtract this amount from your income. The result will be how much money you have left over to cover non-essential bills like credit cards, cable, entertainment and savings. Step No. 4: Sticking To Your Budget. Creating your simple budget is the easy part. Sticking to it is what will be the challenge. In order to stick to your budget you will need to dedicate yourself to sticking to the budget. If you are having a hard time staying within the guidelines of your budget then you can enlist the help of a trusted friend or family member. They can help by encouraging you to stay within your budget, or tell you when you are making a purchase that doesn't fit within your budget. If you have extra money to spend, then you can hire a financial manager who will take control of your money, pay your bills and provide you with an allowance for incidental expenses. Financial directory