How do I make a personal budget

How do I make a personal budget?
First of all, what does it mean to make a personal budget? A personal budget includes all your income and expenses that you have on a monthly basis. When you have your budget you have the financial plan which tells you or determines the amount of money that you would spend on various expenses each month. Your budget would also take into account your income, debt outstanding, savings for retirement and amount of money you have for emergencies. Your budget would also allow you to understand your personal finances. It also assists you in understanding how much you spend your money. Making a personal budget also assist you in determining whether or not you can afford to purchase a home or may be a car or something you have prioritized.

Why should I make a personal budget? A budget helps you keep track of your money, by helping you determine how much comes in and goes out so you can avoid borrowing money or getting payday loans. As the matter of fact, you will discover by creating a budget that you are spending money on something you really don’t want to spend money on. By creating a personal budget you would write down all your expenses and your income. You would be surprise to see where your money is going after tracking your expenses in a month.
How to get started with creating a personal budget
You can start by writing down all the income that you receive on a monthly basis when you make a personal budget. This income would include money from job, alimony, child support, social security and many others. After writing down your income, put down all your expenses which include your rent, mortgage payment and other expenses you make within a month.
What if my income does not cover my expense each month?  You can consider adjusting your expenses by selecting some or all the following options. Consider reducing you entertainment expenses. May be you go to the movie 3 times a week you can make it once a week and check back your income at the end of the month to see the changes. And do the same to other things which is not that a priority in your agenda or scale of preference.
Here is a general guideline on what percentage of income should be allocated to the various expenses areas:  tithe 10% (don’t steal from GOD) housing 31%, transportation 18%, food 11-15%, insurance 5%,  savings and investment 10-15%, health care 5-8%, clothing 5% and entertainment 5%.
And always remember that patience is a virtue. I know you have heard this before but it is important it comes to your personal budget. Hold off on making purchase until you have planned for that expenditure.  You would be glad you did in a long term……..



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