Budgeting for Dummies (or the not so dumb!)

A budget is a powerful tool you can use to help you take control of your money.

 

In order to begin, you must know approximately what you must spend a month. Start by putting your expenses into categories, such as groceries, health, utilities, etc. Some people find it helpful to work with two groups of expenses: essentials and extras. Remember to keep the budget flexible and easy for you to understand.

 

The next stage is actually putting a budget together. Pick a time frame to base it on. You could pick a weekly, bi-weekly, or monthly guide. Many people match their budget with their pay period.  Another option is to do a quarterly or annual budget. This can help if you want to save for large periodic bills or annual targets like holidays. Next, to estimate your income. Stick to regular income, like wages and savings interest. Use your net of tax wages to calculate. The third step is to estimate your expenses.  Then, work out the difference by subtracting your total expenses from your total income to get your net results. Then, fine tune and plan.  After the timeframe you picked, go back to the budget and  match actual results against your estimates. They should be close to your actual spending.  If not, your budget (or spending) should be adjusted. Keep your budget up-to-date. You  will also want to keep track of your expenses and if necessary adjust your budget.

 

Now you have to stick to it. In order to stick to your budget , set targets, fine tune your budget, keep track of your spending in between periods, and adjust it if you’re not on track. There is software available that can help you create a budget, such as Quicken or Microsoft Money.