What is Budgeting Money?What is budgeting money? In simplest terms, budgeting is aligning your current expenses to your income, and to your future goals. Personal finance budgeting is an almost sure-fire way, to ensure you don't spend any more than you should be. And what happens if you spend more than you should? Nothing may seem to happen initially, other than you enjoying the fruits of your purchases. But soon, you may find that you don't have money saved up to cover for any unforeseen expenses. But that's not the end of it! If you continue to not keep track of where your money is going, chances are very high that in a matter of time, your spending will exceed your income, credit card debt and other loans pile up to account for those additional expenses, and you may well be on the road to insolvency. What does budgeting money entail?It's a 5 step process:
Sounds easy? Well, for most of us, 1 above is probably the easiest part. 2 is the tedious part. It involves going back a couple of months, and checking old receipts and statements to see what's been going on. Or, if you don't have those old receipts, keep a conscientious tab of every little expense for the coming month or two, to get those numbers. In 3, make sure you include an emergency saving fund of at least 6 months of your pay, as one of your short-term goals - in fact, the most important of your goals. If you have credit card debt, getting rid of it will be another of your important goals - short-term or long-term depends on how much you currently owe. Other big ticket expenses you plan to make in the future could be another of your goals as well - may be you should include this in your goals after you are done paying off your credit card debt (if any). And yes, don't forget to include retirement saving as your must-have long-term goal. 4 is the tricky part. Which of your expenses from 2 should you cut back on, to accommodate your goals in 3, and keep them under your income limits in 1? This step is the essence of budgeting money. 5 is the hardest part. Sticking to the budget, month after month. But the good news is - it is the hardest only the first few months. Then, once you see the advantages of living this way - seeing your credit card debt diminish, having the satisfaction that comes with the knowledge of where your money is going, and experiencing the peace of mind of knowing you are working on your goals - this will soon become a habit. Anything else? Yes. If 1 changes, revise 2 through 5. If it is an increase, consider putting the additional money into savings as well (or paying off debt if you have any). If 3 changes - family situations change, priorities change, old goals are met - re-do 4. In other words, work on budgeting money regularly, to ensure your budget is up-to-date, and reflects your most current financial situation and aspirations. You may use a personal budgeting software that can make it easier to track your spending and achieve these budgeting goals. Additional Budgeting Information Importance of Budgeting Wondering why budgeting is important at all? Here is why. Tips on Budgeting Monthly Budgeting Living Expenses Household Budgeting Percentages Shoestring Budgeting Envelope Budgeting System Web Based Budgeting Software Try a Budgeting Software for FREE Budgeting Worksheets Budgeting Sheet Budgeting Template Free printable budget planners, templates, and excel worksheets to help organize your household and personal budgeting so you can manage your money and keep track of your spending as you go along. Return from Budgeting Money to Personal Money Management Home Back to Credit Card Debt Relief Home New! CommentsHave your say! Leave a comment in the box below. |