Learn How to Budget
The first step to take when starting a budget is to choose a budgeting method. You can use something as simple as pen and paper, or you could go an easier way by using Excel spreadsheets or a budgeting software program. Any of these will work just fine, but some will be easier than others.
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.
Now add up your monthly cash outflows. These are all your monthly expenses. Add up absolutely everything you spend your money on such as food, utilities, rent or mortgage, clothes, snacks, entertainment, etc. Do your best to try to add up even the small expenses such as your morning coffee from the coffee shop.
Now subtract your outflows from your inflows. This number is called your net cash flows. If it is positive, you are saving money. This is extra money each month that you are probably putting into some kind of savings. For example, if your net cash flows is $200, you are increasing your wealth by $200 each month. If you don't have this much extra each month, you must have added up your columns wrong.
When you subtract the numbers and get a negative number, this means you are losing money each month. You are creating debt for yourself. Add in the interest that your debt is continuously collecting and you are losing even more money. A negative net cash flow is bad, especially if it's a large number.
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.
To keep up a budget, you need to continue to record all your income and expenses every month. After youve gone through everything and found where you can cut back, make sure you only buy where you have allowed yourself.
If you use credit cards, pay off the balance every month to avoid paying interest and make recording your expenses much simpler. Of course, the no interest is the real bonus there. If you have credit card debt, DONT PUT ANYTHING ON OUR CARD! You need to work on paying off your debt and staying away from more!
Follow your budget every month whether it be in a notebook or using software. Always be aware of where you are spending your money. If you dont need it, dont buy it! Instead, save a small portion every month for fun money. Having savings accounts for vacation funds, car funds, and any other types of funds are a great way to compromise between getting what you want and staying financially secure.
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.
Now add up your monthly cash outflows. These are all your monthly expenses. Add up absolutely everything you spend your money on such as food, utilities, rent or mortgage, clothes, snacks, entertainment, etc. Do your best to try to add up even the small expenses such as your morning coffee from the coffee shop.
Now subtract your outflows from your inflows. This number is called your net cash flows. If it is positive, you are saving money. This is extra money each month that you are probably putting into some kind of savings. For example, if your net cash flows is $200, you are increasing your wealth by $200 each month. If you don't have this much extra each month, you must have added up your columns wrong.
When you subtract the numbers and get a negative number, this means you are losing money each month. You are creating debt for yourself. Add in the interest that your debt is continuously collecting and you are losing even more money. A negative net cash flow is bad, especially if it's a large number.
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.
To keep up a budget, you need to continue to record all your income and expenses every month. After youve gone through everything and found where you can cut back, make sure you only buy where you have allowed yourself.
If you use credit cards, pay off the balance every month to avoid paying interest and make recording your expenses much simpler. Of course, the no interest is the real bonus there. If you have credit card debt, DONT PUT ANYTHING ON OUR CARD! You need to work on paying off your debt and staying away from more!
Follow your budget every month whether it be in a notebook or using software. Always be aware of where you are spending your money. If you dont need it, dont buy it! Instead, save a small portion every month for fun money. Having savings accounts for vacation funds, car funds, and any other types of funds are a great way to compromise between getting what you want and staying financially secure.
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