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First steps to a proper budget

November 8th, 2008 at 12:51 pm

We have all heard that in order to be in good financial order, you need to take a budget into account.
Well, I am sure most of you have at some point have had the thought that budgets are something only businesses need. (Not you as an individual who can't possibly live on more than what you earn).

But the truth is, as much as many are you angry that the government is living on a negative budget (it owes more than it takes in). Many of us, as individuals also are living on a budget being our means.

Time for get back on track.

But where to start, well, like any problem, first you have to be honest with yourself and admit you have a problem.
But don't be disappointed. This is the first step to the new you.

To initiate setting up a budget, it is recommended that you write down your moth to month recurring expenses. I would start with items that don't vary. Afterwards, I would add any month to month bills (utilities) that vary and list the average monthly bill, or base it on last month's amount (whichever is the greater amount, you don't want to under budget).

Here is a list of my expenses:

RENT $900
CAR Insurance $160.36
Car Insurance $138.17
Commuter Pass $59.00
Phone bill $118.00 +-
Cable Service & Internet 85
Credit Card $150
Credit Card 2 $150
Student Loan $60.00

Once you have the basics, list any utilities that you may pay.
I don't have many, so here they are:

Gas $45 +-
Electric $35 +-
Food $225.00 +-

Once you start writing down what you pay on a month to month basis, it is important to keep updating your information. I am sure that there will be items that you may have missed.

For example, you may forget to add a water bill, if you pay it on a quarterly basis. The same applies for taxes.

Also remember to try to add excise taxes n vehicles for the month the car registration renews each year.

Its a tough job nailing down all your expenses but this is the very beginning.

I use a notebook, so I can list and check off the items as I pay they through the month.
I also have the due dates written in to ensure that the wills are taken care of with a priority.

Next step:

Try to take note of all your cash & credit expenses on a day to day basis.
Its not necessary for you to cut back, you just need to start becoming aware of where your money is going.

If possible, it's a good a idea to budget for small expenditures such as morning coffee, dinner out on weekends, gifts, and unexpected expenses (i.e. emergency cash).

Getting in the habit of checking where you are is a good idea. You don't need more than an hour each week or two.

Once you have a list of what you typically pay on recurring expenses on a month to month basis, you can set aside funds to ensure that your month to month expenses will be covered, and you won't get caught not having cash to pay bills on time.

This information is also useful to determine where, if desired, you can cut back and not be hurt.
It also helps you determine what services you can cut back on, so that you can save more. (or if in debt like me, save some cash to cover other expenses).

Analyze what your take home pay is and try to budget so that you are no longer in need of using a credit card.

I have not used my credit card for over 6 months. I have had to sacrifice a lot, but not that much. Since I currently have a hefty amount of debt, I don't anticipate using my CC any time soon. I look forward to the day that I will be credit card debt free.

It is a day that is coming, each month I see how much progress i have made, and although it feels bad to be in debt, it feels great knowing that each month the balance is a little less.

Let me know if my information has been of use to you.

1 Responses to “First steps to a proper budget”

  1. whitestripe Says:

    what i do for my 'budget' is calculate a years worth of bills and then divide it by 52. then i put this amount away each week and it means i always have money to pay the bills.

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