Making a monthly budget is your first step towards a planned and secure financial future. Don’t wait to start developing a monthly budget before you run out of all your savings and cannot decide whether to incur the expenses on basic necessities or pay back your debts. Here are some tips on how to go about developing a monthly budget, so that you do not spend more than you earn and better even, you start saving for a secure future.
1. Firstly check up on your liquid assets. These are the assets from where you can immediately draw out money. Take a look at all your savings, investment accounting and checkings. Note down, how much money is available in each account, with the interest rates on them.
2. Calculate how much you earn each month. Make proper calculations on how you earn each month.
3. Add up any other income that you have, like alimony.
4. Next up, calculate the total amount you owe in monthly debt payments. These can include credit card bills, mortgage rent, car or home loans, student loans, or any other loan you may have taken from the bank or any other financial institution.
5. Carefully calculate your instalment payments. Also, you should calculate how much do you pay out in monthly premiums.
6. Calculate an average of the amount you give for using utilities such as water, gas, electricity, internet, cable, or any other.
7. Estimate your monthly grocery bill. You must have the receipts or even if you don’t have them, you can easily estimate how much you spend monthly on groceries.
8. Figure out how much do you draw out from ATMs. You will get a fair idea of how much you spent on needs and much you spent on things you just wanted to buy, like a game or new shoes.
9. Foresee the special expenses. You may need to give out gifts, go on vacations. Take them into account.
10. Now, you need to decide how you will keep a record of your incomes and expenses so that you keep coming back to it. You can either use paper and pencil or can use budget software. Whichever way you decide to choose, make two segments. One for the income and the other for expenses.
Put down all the information collected in the above mentioned steps. Calculate the amounts. Now, if you have a positive difference between the two, that is, if your income is higher than your expenses, good enough. But, if it is not, try and make changes to your expenses, like you can easily strike you that game or that new pair of shoes. Try to bring the expenses down, or at the least try to balance them. But balancing again is not sufficient if you need to save. You will have to make drastic changes to your expenses so that you start saving.
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