Why do you need a budget? Let me ask you a question, are you not able to save at least 10 percent of your earnings from your paycheck, or are you living paycheck to paycheck and can't seem to make ends meet. We'll those are just two examples regarding why implementing a budget in your personal life may be the answer. So, what is a Budget? A Budget is a visual picture used to illustrate the inflows and outflows of your income and expenses. The purpose of the budget is to create a realistic picture of how to live within your means with the income you have, and to measure those spending habits; hence expenses each month to make sure your staying on track. So how is a budget created?
1.) List all your sources of income for example; Wages, Business, Unemployment, Disability, Retirement and Investment Income
2.) Break out your Fixed and Discretionary expenses. Fixed expenses are the expenses that are essential in order for you to survive in life. For example; Rent, Utilities, Food, Transpiration, Childcare/School, Medical, Insurance and Taxes. Then there are the non-essential expenses are that you may have that are discretionary, meaning they can either be limited or eliminated. These are Travel, Wardrobe/Clothing, Personal Grooming (hair care, manicures and pedicures), Meals & Entertainment (Fast-food, movies, clubbing and concerts), and Bank fees.
Once you have outline what your fixed expenses are, now make a one month short-term goal for yourself. This goal is to only spend what you have for the Fixed expenses and to eliminate at least four items on the discretionary list and keep one item which you will only allocate two percent of your net monthly income. Let me illustrate, say your net monthly income is $3,500, then that would be 3,500 *.02= $70. Now, you would use that $70 dollars for Wardrobe/Clothing, Personal Grooming, or Meals & Entertainment. Try increasing the percentage between 5-7% and work with the numbers to see what would be comfortable for you, but remember your goal is to create a budget and stick with it and not quit. The main goal with the exercise is to create a savings for yourself and live within your means.
So, I just want to conclude with this creating a Budget does not have to intimidating or hard work. It's just a matter of getting started and making small sacrifices to see the results and progress.
Why do you need a budget? Let me ask you a question, are you not able to save at least 10 percent of your earnings from your paycheck, or are you living paycheck to paycheck and can't seem to make ends meet. We'll those are just two examples regarding why implementing a budget in your personal life may be the answer. So, what is a Budget? A Budget is a visual picture used to illustrate the inflows and outflows of your income and expenses. The purpose of the budget is to create a realistic picture of how to live within your means with the income you have, and to measure those spending habits; hence expenses each month to make sure your staying on track. So how is a budget created?
1.) List all your sources of income for example; Wages, Business, Unemployment, Disability, Retirement and Investment Income
2.) Break out your Fixed and Discretionary expenses. Fixed expenses are the expenses that are essential in order for you to survive in life. For example; Rent, Utilities, Food, Transpiration, Childcare/School, Medical, Insurance and Taxes. Then there are the non-essential expenses are that you may have that are discretionary, meaning they can either be limited or eliminated. These are Travel, Wardrobe/Clothing, Personal Grooming (hair care, manicures and pedicures), Meals & Entertainment (Fast-food, movies, clubbing and concerts), and Bank fees.
Once you have outline what your fixed expenses are, now make a one month short-term goal for yourself. This goal is to only spend what you have for the Fixed expenses and to eliminate at least four items on the discretionary list and keep one item which you will only allocate two percent of your net monthly income. Let me illustrate, say your net monthly income is $3,500, then that would be 3,500 *.02= $70. Now, you would use that $70 dollars for Wardrobe/Clothing, Personal Grooming, or Meals & Entertainment. Try increasing the percentage between 5-7% and work with the numbers to see what would be comfortable for you, but remember your goal is to create a budget and stick with it and not quit. The main goal with the exercise is to create a savings for yourself and live within your means.
So, I just want to conclude with this creating a Budget does not have to intimidating or hard work. It's just a matter of getting started and making small sacrifices to see the results and progress.
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