How To Budget Your Personal Budgeting
Police numbers will have to fall once budget cuts start in earnest, Sir Hugh Orde says
Police numbers will almost certainly have to fall once budget cuts start to bite, the chief police officers’ leader has warned.
Read more on Daily Telegraph
The thought of putting yourself and your family on a budget can often feels overwhelming for many. The truth of the matter is that not having a budget, operating with financial blinders on, is much more overwhelming than creating and sticking to a budget.
Before you even get started thinking about a budget, you’ll probably want to spend some time assessing your attitude to money. Money is not an evil or a bad thing. In fact money is wonderful! Money enables you to have a roof over your head, to feed your family and pets, to keep you and your family healthy, and to wear the clothes that help you tell the world who you are and what you’re about. Money buys education opportunities, cultural experiences, and money enables you to help others in need. Think positively about your money. You certainly wouldn’t think money was bad if you were giving it to Katrina victims or the parents of a child with a debilitating disease.
Once you’re ready to approach your budget with a smile on your face, here are a few steps to get started:
Step 1. Find a pre-formatted budget worksheet. You can find these online. They generally include the basic expense categories like:
1 Home
2 Utilities
3 Food
5 Family
6 Medical
7 Transportation
8 Debt
9 Entertainment
10 Pets
11 Clothing
12 Miscellaneous
13 Investments and Savings
14 Donations
Step 2. Spend a few minutes reviewing the categories listed in your budget worksheet. Do they make sense for your lifestyle? What categories can you eliminate? What categories will you need to add? You can find this information by reviewing your credit card statements, checkbook register and your bank accounts for the past three months. Take a look at each category that is right for your lifestyle and add sub-categories. For example, under “Entertainment” you might have the following sub-categories:
1 Movies
2 Dancing
3 Books
4 Bowling
Step 3. Determine your income! If you receive a regular pay check, go ahead and calculate your monthly take home pay before taxes. You’ll account for your taxes in your budget and this information will help you at year end when you’re doing your taxes.
Step 4. Before you jump in and begin a budget, take a month or two to track your spending using the various categories you’ve already determined. This means keeping track of all your spending, keeping receipts and not letting any dollar go untracked. This is the most important aspect of starting a budget; you need to know how much you spend on everything. You need to know where your money goes. The point to this step is to gather information, not to limit your spending or spend less than you normally do. If you normally go out to dinner three times a week, don’t all of a sudden go out to dinner just once a week simply because you’re tracking it. Doing so will set you up for budget failure and we want you to succeed.
Step 5. After tracking your expenses for one to three months you’re ready to set some goals. A budget won’t do you any good if you don’t have some financial goals. Do you want to save money for a vacation? Retirement? College fund? Financial goals are two part: how much time do you have to save the money and how much do you want to save?
Now you have absolutely all the information you need to create a budget. It is important to know that a budget isn’t set in stone. If you find after a month or two that you’re spending more on utilities than you expected but much less on food, then adjust your budget. The most successful budgets are budgets that reflect your life, are realistic and are easy to access. To keep an eye on your spending and make it easier to stick to your budget, keep your information in a location that is easy for you to access.
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W. Richland mayor settles in after bumpy start
WEST RICHLAND — Donna Noski has mapped out her first 90 days in office as West Richland’s new
Read more on Tri-City Herald
You’re a grown adult. Right? How is it then, that this most basic of tasks – the personal budget, has you cowering in the corner afraid of a bunch of papers? It’s only a pile of papers that you will knock into shape with a pen, a pad, a calculator and a little determination. Let’s get right to it, shall we?
Easy Step #1. Get those documents into some order.
Go to the drawer, find all the latest credit card statements, the store card statements and the outstanding balance on that personal loan. Get all the bills, the correspondence and other notices and put them in a pile. Now go through each piece of paper and consign it to 1 of 3 piles. TRASH, BILLS, CORRESPONDENCE. Be an adult, get angry and just do it.
Easy Step #2. Categorize the BILLS (not house or car debt)
Go to the BILLS pile and separate the documents into household bills and credit cards/loans. The utilities, phone, local council rates and other regular bills need to be sorted as to their due dates and paid as best you can manage. You may have to forfeit some entertainment and some meals eaten out for a while – just accept it, until these are brought up to date and under control.
Easy Step #3. Work on the Credit Cards and Loans
The credit card and loans are treated a little differently since only a minimum payment is required and you have some degree of freedom with your payment amounts. Add up all the outstanding balances for credit cards and other loans. Once that is done, make a pact with yourself to pay down these amounts as quickly as possible both in terms of money and time frame.
Easy Step #4. Look at your income and spending.
Now that you have a handle on the household bills and the credit card/loans amounts, it’s time to compare your income and spending. This is where a pre-formatted simple spreadsheet can help (but not necessary if you haven’t used one before). Firstly, add up all forms of income (cash in) for a month – salary (less taxes), interest, other income. Secondly, list out all your expenditure (cash out) for the month.
You won’t have this data at hand, today, I know. Short of waiting a whole month to get really accurate data you could estimate your spending to your best ability. Don’t leave any thing out. Include the cigarettes, drinks, gambling, bought coffees, meals out, everything. Now minus your spending from your income and check out the balance.
Easy Step #5. Allocate the free balance to those unpaid bills and credit card/loan amounts.
Allocate the free balance to the bills and the credit card/loans repayments. If there is not enough free cash to pay them all as they fall due you have 3 options. Spend less, earn more or a combination of both. It’s that simple.
Easy Step #6. Commit to Spending Less – Live Within Your Means
You did not get into this mess overnight. Likewise you won’t be able to get out immediately – it will take a little time.
Review your spending items and work out ways to spend less. There are many resources available to help at your local library or on the ‘Net.
That’s it in a nutshell. Face up to the challenge, do the math, make the commitment. Looking back, you’ll be so thankful you made the effort.
Bruce Hokin has designed a simple budget spreadsheet 5 Steps to Freedom Personal Budgets. It’s based on his extensive background as a qualified, experienced accountant, manager, consultant and financial adviser. You can download this powerful budget assistant today and be on your way to financial freedom within the hour. You can also click here for your FREE Mini-Budget.
