Debt Management – Budgeting Your Money
Many people ignore one of the most obvious methods of wealth creation: budgeting their money. Nobody can increase their wealth unless they know how much money they have and how they spend it.
This means that if you want to have money available, you will have to make a budget. Fortunately, the budget is not that difficult or complicated.
Create a budget
The first step in the budget is to create a budget. All you have to do is just sit down, watch your expenses and your income. Then write down how much you need to spend to pay your expenses on a piece of paper.
Most people fail in the budget because they make a too rigid budget and neglect two important aspects of a budget. Whenever you create a budget, always include a saving and a cash reserve. Try to put 10% of your income in savings and 10% in the cash reserve. Saving is the money you are saving for the future, a cash reserve is extra money you can use for emergencies and unforeseen consequences.
Having a cash reserve is vital because you will not have to use credit cards or resort to savings in most situations. If the cash reserve is still at the end of the month, leave it. That way, there will be additional funds available.
A good general rule for the budget is to try to budget a little more than what you actually spend on items. If the grocery bill is normally $ 500, the budget of $ 550 for the purchase of food, in this way, you will not have to use savings or cash reserves if the costs of the purchase are a little higher. Do the same for other expenses.
Staying in the Budget
It is a good idea to compare your budget and your expenses approximately once a week. Just sit down and review your expenses and your budget, and see if you are inside it.
A good way to keep track of your expenses is to make all your purchases with a debit card. That way, you will have a written record of your expenses in the form of your return. You will also have an online record of your expenses that you can verify.
Try and make as many purchases as possible with a debit card. This way, you can see if your budget works or not.
Another good budget suggestion is to avoid automatic payment plans and checks. Instead, try to pay as many bills as possible by paying electronic bills. This way, you will know what money will go out, when it is going and that only the payments covered by the funds in your account. Use the electronic bill payment that requires you to initiate the payment yourself.