Saturday, February 28, 2015

Seven Steps For Creating A Budget That Works For You

Money management is an important skill to have at any age. Creating a budget is the central discipline of financial stability and freedom. Often times, many people fall into serious debt without even realizing it because they don't have a budget to follow. Making a budget doesn't have to be a tedious process, however. Here are seven steps for creating a budget that works for you.

Monthly Expenses

Make a detailed list of needs versus wants in your daily life. You will likely be cutting back on some of the wants, and you should be honest about things that you do not need so that budget cuts can be made. Take a look at your expenses from the past six months and find out how much of your money is really going to needs. Of course, there can be some money budgeted for wants, but it's important to know how much. 

Get Rid Of Extras

As you create your lists, you will likely come across duplicitous items. Choose the most effective option for your budget and prepare to cut the other one completely out of your life. Making everything as simple as possible will help you an effective budget you can stick to. 

Learn To Make Lists

One of the main reasons that people are not able to stay on a budget is impulse buying. However, if you make lists before you go to the grocery store and places similar to that, you will be much less likely to spend your spare pennies on useless items. This includes making a list for other things like clothes shopping. Be sure to not overbuy, and maybe even include a price max for lists like these. 

Consider Other Responsibilities

If you have people that depend on you, they will obviously take up some percentage of your budget. Make sure that you keep them in mind when you are making your budget so that you do not incur the much more serious cost of losing friends and family.

Remember Taxes

The breakdown of many a budget is the fact that many people do not calculate taxes when they are making them. Consider your tax bracket, and make sure that you place all of the proper calculations in your budget. No one likes paying taxes, but this is not a reason to try to make them disappear as you move towards financial freedom.

Create A Savings Plan And Emergency Fund

Although you may be planning for a budget that you will hope to stick to, life does not happen on your schedule. Many people use unexpected emergencies as a reason to completely destroy any discipline that they had on a budget. Having an emergency fund will keep you from acting on this temptation. Anything from a job loss to medical expenses or car accidents can quickly put anyone into debt. You should have at least three to six months worth of income save for an emergency fund. This will help if keep stress levels down and allow you to make payments if you suddenly loose income or have huge expenses to pay. 

Put Your Budget Into Action

After you have done all of the planning, it is time to begin building the discipline that will create the budget that you can live with. It's important to remain flexible, though. If you find that something isn'y working, be sure to make changes as needed to keep your budget realistic.

Staying on a budget can be difficult for anyone. However, it is definitely a good idea for anyone who is looking to explore true freedom later in life. Follow the steps above for the budget that will work for you. If you don't know where to start with your finances or are recovering from bad credit, seek the help of financial experts to get back on track again. Informational credit to Keith G. Collins Ltd.

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