Tips For Making Your Budget Plan
Budgets are an essential part of our lives whether we like them or not.
Many people just keep spending without leaving any money aside for emergencies.
They often end up being in debt and could also become bankrupt.
A budget is a sensible way of ensuring that such a situation does not arise.
The two important aspects of a budget are income and expenditure.
Ideally your budget should ensure that your expenses do not exceed your income and you have a little set aside for a rainy day.
Making a mental note of your income and expenses is not enough.
A budget should be drawn up in tabular form and should provide you a summary of your details.
The expenditure should be classified under different heads such as housing, transport, entertainment and household expenses.
These main heads can be subdivided further.
Housing and utilities can be divided into rent or mortgage payment, insurance, taxes and electricity and water and garbage pick up.
Entertainment can be further broken down into cable television, internet access, eating out, club subscriptions, sporting events or parties.
Expenditure on health and beauty can be sub divided into hair cuts, make-up cost, medical and dental expenses, costs of weight loss programs, dietary or special health products like nutritional supplements.
Transport expenditure includes sub heads like car payments, insurance, gas, maintenance and repairs, air travel, rental cars and public transport.
Communication can be classified under the following subheads: telephone, cell phone and voice mail.
Under household expenses, you can list sub heads like groceries, cleaning supplies, laundry bills, home improvement and other home projects.
You should also budget for miscellaneous expenses like credit card payments, loan payments, child care, allowances for children, vacations, donations, gifts for Christmas, birthdays, anniversaries etc.
You should also have a separate fund for emergencies.
Now break down your budget into monthly expenses by dividing the figures by 12.
Deduct this amount from your monthly take home salary.
If you find that the remainder is in the negative, you need to reexamine your budget and see here you can cut down on your expenses.
Look for ways to economize on your spending.
The size of your income does not decide if you are going to draw up a budget or not.
However large or small your income, maintaining a budget allows you to manage your finances by keeping track of your income and expenditure.
Many people just keep spending without leaving any money aside for emergencies.
They often end up being in debt and could also become bankrupt.
A budget is a sensible way of ensuring that such a situation does not arise.
The two important aspects of a budget are income and expenditure.
Ideally your budget should ensure that your expenses do not exceed your income and you have a little set aside for a rainy day.
Making a mental note of your income and expenses is not enough.
A budget should be drawn up in tabular form and should provide you a summary of your details.
The expenditure should be classified under different heads such as housing, transport, entertainment and household expenses.
These main heads can be subdivided further.
Housing and utilities can be divided into rent or mortgage payment, insurance, taxes and electricity and water and garbage pick up.
Entertainment can be further broken down into cable television, internet access, eating out, club subscriptions, sporting events or parties.
Expenditure on health and beauty can be sub divided into hair cuts, make-up cost, medical and dental expenses, costs of weight loss programs, dietary or special health products like nutritional supplements.
Transport expenditure includes sub heads like car payments, insurance, gas, maintenance and repairs, air travel, rental cars and public transport.
Communication can be classified under the following subheads: telephone, cell phone and voice mail.
Under household expenses, you can list sub heads like groceries, cleaning supplies, laundry bills, home improvement and other home projects.
You should also budget for miscellaneous expenses like credit card payments, loan payments, child care, allowances for children, vacations, donations, gifts for Christmas, birthdays, anniversaries etc.
You should also have a separate fund for emergencies.
Now break down your budget into monthly expenses by dividing the figures by 12.
Deduct this amount from your monthly take home salary.
If you find that the remainder is in the negative, you need to reexamine your budget and see here you can cut down on your expenses.
Look for ways to economize on your spending.
The size of your income does not decide if you are going to draw up a budget or not.
However large or small your income, maintaining a budget allows you to manage your finances by keeping track of your income and expenditure.
