Learn How to Budget
To start a budget, you need to decide on either a budgeting software, using excel, or using a regular notebook and pen. Of course, using software or excel is going to be much easier for you, so I would suggest using one of them. If you have a very small budget, a notebook might be fine, but for most, software would be best.
List out all your sources of income and how much each is. Include your salary or wages for each month, tips and bonuses, interest from investments and other investment income such as dividends and capital gains, and any other income. Add these all up together and you will get your cash inflows for the month.
Your cash outflows include all your expenses. Add up every penny you spend in a months time. Add together rent or mortgage, food, entertainment, gas, and anything else. Add everything you spend whether it was paid for by check, credit card, or cash. Include absolutely every expense being as specific as possible.
By taking the difference of these two values you will find your net cash flows. If you have a positive net cash flows, this means you have extra money. Lets say your net cash flows is $500. You have $500 extra every month after all these expenses. You might normally put this into savings or investments.
If you have a negative net cash flows, this means you are going into debt each and every month. If your net cash flow is -$200 every month, you are going into debt $200 every month. In actuality, it is more because you are probably being charged interest on the debt you have because its either a loan or on a credit card.
If you get on or around zero, you are breaking even. You're probably happy that you're not going into debt, but your not saving either. If you have no savings put aside and you end up in an emergency situation, you will probably end up in debt. You need to cut back on your outflows so that you can save.
In order to maintain an effective budget, you need to keep recording your income and expenses, at least for the first few months. Look through your budget and wee where you can cut back. Finally, stick with what you are budgeting. Only buy what you have set for yourself.
If you have any credit cards, pay off the balance each and every month. This will save you a lot on interest. If you already have credit card debt, stop charging to it immediately. You must pay off your debt. If you have trouble with credit cards, once they are paid off, stop using them all together.
Stick with your budget. As time goes on, it will get easier. Continue to adjust it until you are saving what you need and can live by it. Eventually, following your budget will become second nature. Set up savings goals to put the money you are saving to good use such as paying off debt, building an emergency fund, buying a house, etc.
List out all your sources of income and how much each is. Include your salary or wages for each month, tips and bonuses, interest from investments and other investment income such as dividends and capital gains, and any other income. Add these all up together and you will get your cash inflows for the month.
Your cash outflows include all your expenses. Add up every penny you spend in a months time. Add together rent or mortgage, food, entertainment, gas, and anything else. Add everything you spend whether it was paid for by check, credit card, or cash. Include absolutely every expense being as specific as possible.
By taking the difference of these two values you will find your net cash flows. If you have a positive net cash flows, this means you have extra money. Lets say your net cash flows is $500. You have $500 extra every month after all these expenses. You might normally put this into savings or investments.
If you have a negative net cash flows, this means you are going into debt each and every month. If your net cash flow is -$200 every month, you are going into debt $200 every month. In actuality, it is more because you are probably being charged interest on the debt you have because its either a loan or on a credit card.
If you get on or around zero, you are breaking even. You're probably happy that you're not going into debt, but your not saving either. If you have no savings put aside and you end up in an emergency situation, you will probably end up in debt. You need to cut back on your outflows so that you can save.
In order to maintain an effective budget, you need to keep recording your income and expenses, at least for the first few months. Look through your budget and wee where you can cut back. Finally, stick with what you are budgeting. Only buy what you have set for yourself.
If you have any credit cards, pay off the balance each and every month. This will save you a lot on interest. If you already have credit card debt, stop charging to it immediately. You must pay off your debt. If you have trouble with credit cards, once they are paid off, stop using them all together.
Stick with your budget. As time goes on, it will get easier. Continue to adjust it until you are saving what you need and can live by it. Eventually, following your budget will become second nature. Set up savings goals to put the money you are saving to good use such as paying off debt, building an emergency fund, buying a house, etc.
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Find further info and specific details on how to budget. If you're still confused, you can find more info in better detail on how to make a budget.
posted by Credit Counseling at
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