Creating a budget
We all know its benefits and yet we find ourselves just having enough in our pockets to cover for the remaining expenses before the next pay check comes. Creating a budget for your personal finances does not mean depriving yourself of things that you enjoy in life. When you create a budget, you try to understand how much you have available to spend and allocating the funds wisely. When done properly, a budget can actually keep you on track financially. Over time, a budget can help you identify cash flow problems that you didn’t know you had and help you allocate the funds to savings or to an even more lucrative investment.
It is important that you set aside a time to go over your personal finances with your spouse and create your budget jointly. Once you have written down everything, you will be surprised at how much money you have left to save and this will make you wonder where it all goes when in fact you have covered all the important expense. It may take some time to get used to but once you and the members of the family get the hang of it, you will all enjoy the rewards of the surplus of funds created by an effective budget program.
Tips of creating a budget for your personal finances
1. Identification of Income and Expense
Before deciding on how you should allocate your funds, your should identify how much disposable income the family has by combining the income that both you and your spouse make as well as other informal sources of income that you both may have.
List down all the expenses that you incur each month and before putting down what you actually spend on each, think of a figure that you would ideally want to allocate for each item. Once you see the difference you can adjust to minimize the difference between the two. Make your budget realistic and do not make yourself feel guilty over spending on leisure items. Anyway, you deserve this reward once in a while for working very hard for your family.
There are online budget worksheets and forms that can guide you through the whole process in case you need some help. This may see a very daunting task at first, but keeping in mind that this is ultimately for the benefit of the whole family will keep you on track and will help you maintain a personal budget religiously.
2. Allocation for savings
Being able to allocate for expenses will help you identify how much money you still have left to save for savings or other investments. You and your spouse should agree on a figure that you are comfortable with that you will take away from what’s left of the income and commit to putting this in savings or investment each month.
But do not commit the mistake of waiting for all the expenses to be paid up before setting aside money for savings. Make sure that you put aside the savings portion prior to paying the bills to make sure that you have this secure. Most people fall into the trap of waiting until all the bills are paid and end up not saving anything. The more money you have on hand, the more things you will find to spend it on.
3. Stay on Track
Creating a budget does not end with putting them all down on paper. You and your spouse should both commit to sticking to the budget and keeping expenses to your desired figures. Monitor your expenditures and try to stay on target.