Managing My Personal Budget
Saturday, November 28th, 2009If you are reading this, you’re probably looking for a way to gain control of your finances. Preparing and committing to a monthly budget has always been one of the best ways to do this. Having a solid budget is essential for managing your finances, one that has allowed me to live well even on limited funds. One of the most critical things that I do every month is managing my monthly budget, this has allowed me to systematically meet all expenditures, grow my savings, and eliminate debt.
I normally plan my budget for the upcoming month towards the end of the month. This will prepare me with my expenses in the upcoming month. It’s not a good idea to prepare a budget after getting paid because, too often, that flush feeling of having a paycheck leads to uneccessary and spontaneous spending before the paycheck ever reaches the bank.
I start my personal budget by listing all the expenses that must be paid on time like, loan repayments, utilities, insurance payments and car loans. These are the essential things that I must pay to keep a comfortable roof over my head. I like to pad these essentials to create “money back” after paying the bills and, if costs increase out of the blue, I’m always covered.
Next, my budget is subjected to a list of discretionary things I need to cover but could live without if absolutely unavoidable. For example, donations, credit card repayments and monthly sving deposits. Don’t get me wrong, some of these things are also important, but in case of emergency they can be left out. By giving credit card companies the maximum instead of the minimum, I keep my credit score high and my debt low.
My budget will not include the cost of living such as food and entertainment. These expenses get covered by what’s left over and that’s that. Some months involve lots of beans and rice, slow-cooker meals, free or cheap entertainment, and only one inexpensive piece of clothing . This strategy of managing my monthly budget has worked out very well over the long term as long as I observe it religiously.