Debt Consolidation

A Brief Guide To Living Within A Budget

When it comes to living within a budget, there are several things that you need to take into your careful consideration. It is not an easy task; it can be quite challenging. Unless you are ready to face some compromises and to demonstrate a great financial discipline, you may not be able to achieve your financial goals. The first thing that is very important for you to keep in mind is that just because you have to follow a strict budget, it does not necessarily mean that you must live a frugal life and eliminate fun from your life. In fact, you do not need to cut down too much on your entertainment expenses. Entertainment is a part of life. If there is no fun in your life, you will never feel motivated. Therefore, if you want to succeed in your budget plans, you must make sure that you have enough money reserved for entertainment also. Following are some of the things you can do to plan your budget effectively.

Prepare A Detailed List Of Your Income, Savings And Expenses

If you are serious about living within a budget, you must sit back and do some paperwork. You can start by making a list of all your incomes, savings and expenses from the last year. You will need your bills, credit card receipts, and checkbook register for this purpose. Things may sound to be a little complex if you do the calculations manually. Therefore, it might be a better idea to use a computer software program, or at least an Excel Spreadsheet. If you have been budgeting for many years, you probably already have the data saved in a computer program. If yes, your task can be very easy. If no, make sure you save the data thoroughly this time so that you can use the same next year.

Estimate Your Expenses That Might Occur In The Coming Year

If you are considering living within a budget, you must be able to figure out how much expenses you are expecting to occur within the coming year. This specific task requires a lot of brainstorming. It will be better if you discuss things with your spouse, children, and other family members. This way, you can easily reduce the chances of skipping any important expense item. Alternatively, you can estimate your expenses for at least the next three months and then you can multiply the same with four to get a rough estimate.

Develop A System For Tracking

Once you are through with estimate your projected expenses and income, you must feed the data in an Excel spreadsheet or in a computer software program. The idea is to update the data on a regular basis and see if your estimate was correct. This way, you will be able to identify the problem areas and where you have to improve or introduce some adjustments. When it comes to living within a budget successfully, tracking of your actual income and expenses is very important. Regular monitoring is crucial. You cannot just sit back after preparing a budget plan. It never works that way. You will have to see it continuously, on a regular basis, whether things are going in the right direction or you need to introduce some changes in the plan. For example, if you are spending less than what you had expected, you may consider putting that extra money in your savings account or in some kind of investment plans. On the other hand, if you notice that your actual expenses are actually much higher than what you had expected, this is probably the time to cut down fat from some of your expenses that are not that necessary.

While you are planning your strategies for living within a budget, you should not forget to allocate a certain portion of your income to retirement fund and emergency savings account (at least 10% of your take-home salary).


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Posted in Budgeting, Debt Consolidation | 1 Comment »

One Response to “A Brief Guide To Living Within A Budget”

  1. John says:

    Good points. Budgeting is a very important factor for living a smooth life. You can not imagine a good financial position without adopting a strict budget. Following the budget religiously is as important as making a budget, then your efforts will be ruined and you will not be able to get your goal. First of all the most important thing for making a budget is you should be well aware of your expenses and income, if your expenses are more than your income, what will be the future of your budget? Make a list of each and every expenses and then try to do some cutting but it should be for every department of budget. Budget should cover emergency fund, entertainment fund and all the other expenses as well. When you need to cut down some of your expenses always try to do it very efficiently and without making any single fund extremely short. Smart allocation of money among all the funds plays a crucial role in budgeting. Once you make a budget, the continuous checking is very important otherwise your budget will be on papers only.

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