How to Manage Your Personal Budget
If you are reading this, you are most likely going through slight financial stress and searching for a way to gain control of your finances. Producing and sticking to a monthly budget has always been one of the ideal ways to do this. A sound budget is a fundamental tool for managing money, one that has allowed me to get on with my day to day life even on limited funds. Monitoring my monthly budget is one of the most important things I do every month, and it has allowed me to systematically meet all expenditures, grow my savings, and eliminate debt.
I normally map out my budget for the upcoming month close to the end of the month. This gives me a clearer view of my spending in the coming month. It’s not a good idea to prepare a budget after getting paid because, too often, that flush feeling of having a paycheck leads to uneccessary and spontaneous spending before the paycheck ever reaches the bank.
Start your personal budget by listing all the things that must be paid that month like rent, electricity bills, insurance policies, loan repayments and telephone bills. These are the things I must pay to keep a adequate roof over my head and carry on earning money. I like to pad these essentials to create “money back” after paying the bills and, if costs increase unexpectedly, I’m always covered.
Next, my budget is subjected to a list of discretionary things I need to cover but could live without if absolutely unavoidable. These items may include monthly savings deposits, credit card repayments, and donations to charity. Don’t get me wrong, some of these things are also important, but in case of emergency they can be excluded. By giving credit card companies the maximum instead of the minimum, I keep my credit score high and my debt low.
My budget will not include the cost of food, clothing, or entertainment. Ultimately, these items get covered by what’s left in the budget. Some months involve lots of beans and rice, slow-cooker meals, free or cheap entertainment, and only one inexpensive piece of clothing . This strategy of handling my monthly budget has worked out very well over the long term as long as I honor it scrupulously.
