Keeping A Budget

Do you ever wonder where your money goes? That is not good. If you don't know where your money is going, you are probably spending more than you need to be. When you don't keep track of your money, you never really know how much you have. If you don't know that you are broke or going broke, you won't think twice when you blow a dollar here or there, or 20 dollars here or there.

By keeping a budget, you will always know where your money is going. You will know how much you have spent where and you will hopefully not go broke, as long as you do it right. It sounds like something that will accomplish so much for you will be difficult and tedious. It's easy to set up a budget, and once you have, it's not hard or tedious to maintain.

First, you need to figure out your monthly fixed expenses. Gather together all your bills that are always the same. This includes your mortgage or rent, utilities, insurance, credit card payments, car payments, and any others that don't change. Next, figure out your variable monthly expenses and try to estimate them. These expenses will include gas, food, and anything else that you have to spend money on every month but that is never exactly the same. Try to overestimate these expenses a little to allow for error. Prices are always increasing, so you will have to adjust these expenses over time.

Add up all of your expenses for the month. These should not include what you spend on entertainment and anything extra. Those expenses we will decide later, depending on how much money you have left to spend. Add up your expenses and subtract them from your monthly income. How much money do you have left? If you have a lot, of course that is great, but don't think that is all fun money. You need to save some. Whether you are saving for vacation, building an emergency fund, college, or retirement, you must save. An emergency fund is a very good idea. It will relieve a lot of stress for you when you know you have backup money for emergency expenses such as medical or car situations, or job loss.

Once you put aside money for bills and general monthly expenses and savings, you can decide how much you can spend on fun and entertainment. First, decide what it is you do for fun, what you really enjoy and what you could do without. If you aren't sure how much you normally spend, keep track of what you spend your money on for 2 to 4 weeks. Then you will have an idea of how much you need. If you find that you spend more than you have, look where you can cut back. Do you spend $3 or more on coffee every day? That could be costing you up to sixty dollars or more every month. Try making your own for a much cheaper price. Also, stop spending money at vending machines and over priced shops. If you are big shopper, you might find that you really can't afford to be spending hundreds of dollars on new clothes anymore. If you are way overspending, you will need to go on a money diet.

Once you have decided how much you can spend each month, stick to that plan. Stretch out the money so that you don't spend it all in the first week. If you save it for the first three weeks, you will have extra money to spend at the end of the month and it can feel like a shopping spree. After cutting back and finding ways to save, you might find that you could cut back your entertainment fund and save even more money for important things.