Budget

Why Everyone Should Have a Budget

Chances are if you ask the average person on the street if they follow a budget, they will say "no". Budgeting is not something that comes easily to most people and since we are not taught how to budget in school the majority of us are left floundering to find out how on our own. Some people quickly work out the basics by themselves, while others will slide into debt before they seek the advice of a financial professional to help them straighten out their monetary woes.

The basics of successful budgeting involves setting down your out-of-pocket fixed and discretionary monthly expenses such as food, housing, taxes, insurances, gas, etc… and then listing your total sources of monthly income. Your income should be more than your monthly expenses, if it is not, then you have to sit down and figure out where you can cut your monthly spending until your income is greater than your expenses.

A good way to start out with budgeting is to track your expenses for one month to see where most of your money is spent. Once you see where your money is going it will be easier for you to identify the places where you can cut down and save money. One of the most important aspects of budgeting is to work a saving mechanism into your budget. You must save at least ten percent of your monthly income for emergencies or a rainy day. This savings should be considered a fixed expense that you cannot and should not change or vary.

Once you have made yourself a realistic budget then the next step is to follow it. Even people who are heavily in debt will automatically see the beauty of budgeting. A budget helps you allocate your money wisely and effectively. In a budget you will see exactly where your money is going, why it is going and whether it needs to go or not. Once you have done all of this, then you will have a much more secure and healthier financial future; and in the end, isn't that what everyone wants?

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