How To Create A Sound Budget That You Can Live With
If you want to get control over your finances, you must create a realistic budget. There are many free online tools that can help you do that. But first, you must sit down and evaluate the types of things that you spend on. You have a limited amount of income every month, and you must decide how to divide that sum of money into the various types of spending so that you will not overspend.
One major area of expenses is your food budget. Do you prepare a lot of meals at home, or do you eat out a lot? Think about how much you typically spend in a grocery shopping trip, and how many times you go to the market in a month. Then multiply those two numbers.
If you eat out occasionally, allocate an amount for dining out. This includes any food items that you buy, like your coffee or snack that you may get during a work day. If you are on a tight budget, you should not realistically allocate a lot of money in this category. Remember, the more you spend in one area, the less you get to spend in other areas.
A big expense is probably for gas. Gas prices have been going up all over the country, and you have to take that into account. Look at what you have been spending on gas over the past several months. If those are typical months, then you can take an average of those.
There are many other areas in which you must budget. Your mortgage or rent is an important fixed cost. Your homeowner's or renter's insurance is another. You will need to allocate funds for any home repairs that you will need during the year. Do not forget about utilities. As for your car, there are maintenance costs in addition to gas. There is also auto insurance. Then, think about healthcare costs. Your health insurance is a fixed cost that you need to account for. That will include dental insurance as well, and any type of medication that you have to buy. Do not forget educational costs, like tuition and fees.
You should also include a category for entertainment and recreation. Up to this point, you have allocated funds for your required living expenses. You may feel that you have nothing left. However, put in a conservative amount anyway. Lastly, allocate an amount for savings. This is actually an important category because this money can be used as an emergency fund.
After you have plugged in all of these numbers, total all of your expenses and see where you stand in your budget. If the total is greater than your income, then you need to go back and make some adjustments in your expenses. Target expense lines that you can manipulate like the cost in dining out or entertaining. You may need to make some tough cuts to balance your budget.
Once you have created your budget, the most important thing to do is to stick with it. If you can commit to your budget, you will never lose control of your finances.
