Whether you make $50 a week or $5,000, you need to establish a budgeting plan to make the most of the money you earn.
A budget is a very important financial tool that forms a map to take you where you want to go in life.
To prepare for future needs and any financial crisis you might encounter, it is crucial to prepare a family budget and learn to stick to it.
Some people have a hard time reading maps.
Others cannot stick to a budget.
Anyone can learn these skills with practice though, so make no excuses and get ready to plan a working budget.
The key to developing and following a strong family budget map is honesty and transparency.
All your proverbial cards should be on the table.
Know your income from any sources.
Count in salary earned and extras such as money you earn on the side with small outside jobs.
Do you have any interest income or spousal or child support? Be sure to include it.
Gifts of money from family members should be included.
Be familiar with all your revenue streams.
The next step is to make a list of all your monthly expenses.
You might be amazed at how long this list grows to be.
Include everything from rent or mortgage payments, loan payments, utilities, car payments and insurance, repairs and gasoline expenses, medical and pharmacy bills, credit card payments and groceries to occasional items like charity donations, school trips and personal expenses (haircuts or styling, manicures and such).
This is your family budget so do not lie to yourself.
List every little expense you can remember.
Be completely honest and open so your budget can work for you.
Now comes the hard part.
Compare the two lists and use your calculator to enter all your incomes and subtract all expenses.
The amount remaining for the month is all the extra spending money available in that income period.
Plan what you will do with the extra.
Budget some for savings.
Set some aside for recreation if you like to go out to dinner or see a movie occasionally.
The point is to know where this money will go.
After comparing income to expenses another outcome can occur.
It is not uncommon for many people to find a minus sign in front of the remaining amount.
They are shocked to find they spend more each month than they earn.
This disturbing wake up call should inspire them to take major steps to correct this and help their family budget.
Take several days to carefully study the lists of income and expenses you prepared.
Add any expenses that were forgotten.
Consider where expenses can be reduced or eliminated.
Also consider what income might be added or how it can be increased.
If there is a large amount of debt present, develop ways to reduce this income drain.
In addition to the required monthly payment, add more money to pay against the balance to reduce it faster and ultimately pay less interest.
Keeping an eye to the future is the key to improving any family budget situation.
Make goals for the next six months.
Make an outline of where you want to be in five years.
Consider where you need to be in order to retire comfortably.
Carve out money monthly to establish a savings account.
Take the steps needed today to meet those future goals.
Be aware, however, that sometimes you may need to shake up your budget and veer from it temporarily to get on track again.
For example, put off savings until you pay off debts as quickly as you can.
Then you can save the money used for those payments going forward.
This will improve your bottom line and enhance your family budget map.
A budget is a very important financial tool that forms a map to take you where you want to go in life.
To prepare for future needs and any financial crisis you might encounter, it is crucial to prepare a family budget and learn to stick to it.
Some people have a hard time reading maps.
Others cannot stick to a budget.
Anyone can learn these skills with practice though, so make no excuses and get ready to plan a working budget.
The key to developing and following a strong family budget map is honesty and transparency.
All your proverbial cards should be on the table.
Know your income from any sources.
Count in salary earned and extras such as money you earn on the side with small outside jobs.
Do you have any interest income or spousal or child support? Be sure to include it.
Gifts of money from family members should be included.
Be familiar with all your revenue streams.
The next step is to make a list of all your monthly expenses.
You might be amazed at how long this list grows to be.
Include everything from rent or mortgage payments, loan payments, utilities, car payments and insurance, repairs and gasoline expenses, medical and pharmacy bills, credit card payments and groceries to occasional items like charity donations, school trips and personal expenses (haircuts or styling, manicures and such).
This is your family budget so do not lie to yourself.
List every little expense you can remember.
Be completely honest and open so your budget can work for you.
Now comes the hard part.
Compare the two lists and use your calculator to enter all your incomes and subtract all expenses.
The amount remaining for the month is all the extra spending money available in that income period.
Plan what you will do with the extra.
Budget some for savings.
Set some aside for recreation if you like to go out to dinner or see a movie occasionally.
The point is to know where this money will go.
After comparing income to expenses another outcome can occur.
It is not uncommon for many people to find a minus sign in front of the remaining amount.
They are shocked to find they spend more each month than they earn.
This disturbing wake up call should inspire them to take major steps to correct this and help their family budget.
Take several days to carefully study the lists of income and expenses you prepared.
Add any expenses that were forgotten.
Consider where expenses can be reduced or eliminated.
Also consider what income might be added or how it can be increased.
If there is a large amount of debt present, develop ways to reduce this income drain.
In addition to the required monthly payment, add more money to pay against the balance to reduce it faster and ultimately pay less interest.
Keeping an eye to the future is the key to improving any family budget situation.
Make goals for the next six months.
Make an outline of where you want to be in five years.
Consider where you need to be in order to retire comfortably.
Carve out money monthly to establish a savings account.
Take the steps needed today to meet those future goals.
Be aware, however, that sometimes you may need to shake up your budget and veer from it temporarily to get on track again.
For example, put off savings until you pay off debts as quickly as you can.
Then you can save the money used for those payments going forward.
This will improve your bottom line and enhance your family budget map.