Making a Budget

There’s a ton of sweet stuff out there to buy. You’re confronted with the temptation to buy things constantly. It’s part of our society. That temptation to purchase what you want, when you want it, is easily the biggest factor behind credit card debt, and likely one of the biggest factors behind filing for bankruptcy.

There’s absolutely nothing wrong with spending money on what you want if–and only if–it’s within your limit.

Knowing your spending limits is the greatest ally you have in both spending and saving. And the first step to controlling how you spend your money is to make a budget so you can see where your money really goes every month.

Be sure you write your charges into your check book when you use your debit card!) Sure, cash is psychologically harder to part with and using plastic in any form, be it debit or credit–is more effortless. You don’t see how much you really charged that month until the bill comes in.

Tips

• Pay more often with cash or a debit card.
• Make sure you write your charges into your check book when you use your debit card!) Sure, cash is psychologically harder to part with and using plastic in any form, be it debit or credit–is more effortless. You don’t see how much you really charged that month until the bill comes in.

• Categorize the places where you spend money. How do determine if you can afford that hot new car? When you add every thing up at the end of that month, it can’t go over your monthly income or you are already in the “red” in your budget. If that happens every month, your debts are growing out of control.

• Always keep track of purchases when using a credit card so that you know how big that bill will be when it comes.

• Set aside 5% of your monthly income for emergency purposes.

Balancing the Budget

To start your budget, allocate your monthly expenses into various categories: such as rent or mortgage, car payment, food, utilities, gas, insurance, clothes, and entertainment.

Accordingly, allocate a certain amount or percentage of your monthly income for each category. All categories cannot add up to more than 100% of your monthly income. If when you complete your budget, you are spending more money than you are making, you need to cut back on one or more expense categories.

Look at budgeting this way: once you receive your paycheck, you’re spending it all at once. On paper. Gaining control of your spending may seen daunting and limiting, but it’s truly liberating knowing you’re preventing debt… and beginning to set yourself up to total financial security.

(note:
Saving 1: Making a Budget

PDF Information
A Budget Sheet (Sample–Make the kids use it, etc.))