Start putting money back into your pocket by learning how budgeting money can help you take control of your finances.
You first need to understand the basics of income and expenses. If you can learn to control these two aspects of your finances, you are on the road to financial freedom. Being in debt is tough. If you are like many Americans today, it may seem that there is no way out. Budgeting money will help you start to reduce your debt.
Make sure that your budget plan is simple and structured. What is a budget exactly? Simply put, it’s your income minus your expenses. Starting a personal budget is one of the best ways to visualize where your money is going each month.
Start first with your monthly income. Always use your net pay, not your gross.
If you have multiple forms of income, you need to make note of these. Once you have all forms of income notated, add them up. Make sure to write down your total.
Now you will want to list your expenses. It might be best to divide them into groups. Try these groups: Direct Withdrawals, Necessary Spending, and Leftover Income.
Direct withdrawals are those expenses that are automatically withdrawn from your bank account or credit card each month. This will include house payments, school loan payments, car payments, insurance premiums, utility bills, and doctor/dentist expenses. If you have an electronic withdrawal set up from your checking or savings account each month, make sure it is in this group. Add up all expenses in this group and write them down.
Necessary spending consists of credit card payments, grocery bills, cell phone bills, dry cleaning, and any other expenses. This could include eating out on Friday nights or renting a movie on Saturday night. Make sure to list all of these and write them down. You will want to add up all of these as well and write them down.
Leftover income is now what you have remaining after you have paid all other bills. You can use leftover income for vacation trips, birthday presents, and large purchases like home electronics or furniture. I would also recommend budgeting money to set aside for your savings account. It is always good to have something set aside in case of an emergency.
Following these steps will help you start the path to financial freedom. There is light at the end of the tunnel!