For most people, budgeting is a Herculean task that only the strong can manage. When it comes to money talk, individuals would rather eat nails and dirt, or shrivel up in the corner. If you are one of those people, do not fret. Today, you will learn how to create a budget, and go through with it no matter what. There is no secret to this, only calculations and sheer discipline on your part. Shall we?
Know Your Monthly Earnings
Before making a budget, it is essential to know how much money comes in the household, or your hands for that matter. This is not about how much cash is listed on your work contract; rather, this is the money that you take home sans the tax, aka your net income per month.
Divide and Conquer
After understanding the above, it is time to know and divide your expenses. For most people, this fits under the categories; bills (water, rent, electric consumption, gas, etc.,) food, emergency, miscellaneous (clothes, entertainment) and savings which makes up 10% to 15% of your monthly income if you dream of retiring early. Calculate everything individually to give you an idea of how much you spend per category, and sum them all up.
Know Your Goals and Make A Plan
The next step involves making a goal. Do you want to stay on budget for a particular reason? Perhaps you are short on cash this week and want to manage it properly. Having a goal will keep you focused, which brings us to the next action- making a plan. To achieve your goal, a strategy is in order. This may involve not going to the mall for a whole month, or not spending your money outside the monthly bills that you usually pay. Whatever it is, stick to it.
Stick to Your Budget
One such way to stick to the budget set is by being practical. Instead of buying new things, you can always use what you have at your disposal. If buying is the only option left, go for second hand or discounted items. Most people apply this technique; instead of battling temptation, run away from it. That way, you do not have to spend on something that you do not really need.
As you can see, budgeting is not as hard as you think. Discipline yourself, and get all the help you can get to stick to the plan. At the end of the day, you and your family are the ones who are going to benefit from all this.