Many people try to make a budget. The problem is that many fail to keep track of their personal finance. The reasons why? Sometimes it is sheer ignorance of their spending habits. Sometimes it is because they are not honest with themselves or others about their spending. And sometimes it is because they are not keeping track of their income versus their spending. Whatever holds you back, here you will find some tools to help you make a budget that really works for you.
Always start with studying your current spending habits. Use a spending diary for a month to help you spot your spending patterns. You may find that you spend a lot of take out coffee, whereas your partner may spend a lot on clothing.
Now, take a look at how much money is coming in on a monthly basis. Go by the net amount rather than the gross amount, as there can be a great deal of variance depending on where you live and the taxation rate. Hopefully, your income far exceeds how much you spend. If not, here are some tips to help you get on track to balancing your budget and saving.
However, if you have financial difficulties and often fall short come time to pay the mortgage, perhaps you need to do some work together on your budget. After you have established what your monthly income is, you need to make certain that you can cover the basics for living. Those three basics are generally considered housing, food and transportation.
Always cover the important things first. Your housing needs are paramount. Make sure that you can cover the rent or the mortgage before anything else. With that, ensure that you can take care of your heating and electricity, as well as insurance, property taxes and maintenance and repairs.
You need to be able to get where you are going in a reliable manner. You need to have a way that you can get to and from work or school without worries and that you can afford. Whether that means driving a car, having a car loan as well as car insurance and performing regular car maintenance, is up to you. If you can get where you need to go safely and affordably on foot, by bicycle, bus or subway, even better. If, however, your work is more than a half hour from home, try to carpool or ask your employer if they will let you work from home once weekly.
Food is a necessity, no question about it. If more than half of your food costs are take-out, it is time for you to buckle down and start some serious belt tightening. Start packing a lunch every day for work or school. Simply by doing this, you can reduce your take out food costs by more than half. If you are a coffee aficionado, think about taking coffee to work in an insulated cup. Eat supper at home at least five days a week, and if your food costs are very high, switch to eating vegetarian foods at least twice a week.
The rest, as they say, is gravy. Clothing and entertainment can be expensive. So can your addiction to the latest video games, books, movies, or computer toys. Be reasonable. Buy only what you need, rather than everything you want. And if you simply must get some clothes, shop at second hand stores for quality and good prices.
Learning how to live within our means is hard to do. But it is a worthwhile thing for many of us to learn. This way, we can grow our wealth and be able to afford to do other things we want to do now and later in life.