I think one of the biggest problems people face was underestimating how much money they would need to do basic necessities. The amount they put aside was never enough but after a quick examination of some persons’ spending habits it is clear that some items that were bought were unnecessary. They were ‘wants’ rather than ‘needs’.
Armed with the knowledge that there was a way to stop going over budget, I also realized that some people have unrealistic expectations about their ability to buy expensive items.. These items might not be a good short term goal. However, it might be possible to purchase some items over a longer period of time.
It is also important to realize that in order to be successful you have to provide as much detailed and accurate information as possible. It is impossible to guess your earnings and expenses and create a good budget.
Gather your receipts, bills and pay stubs and really make the budget a true reflection of your life. This includes bank statements, investment accounts, recent utility bills, and any information regarding a source of income or expense. One of the keys in the budget-making process is to create a monthly average, so the more information you can dig up the better.
Your expenses are not only limited to your bills, it also includes mortgage or rent payments, car payments, auto insurance, groceries, utilities, entertainment, dry cleaning, student loans, retirement or college savings — essentially everything you spend money on.
Expenses – fixed and variables
Remember when making a budget ensure that both types of expenses are reflected both fixed and variable. Fixed expenses are those that stay relatively the same each month and are required parts of your way of living.
They included expenses such as your mortgage or rent, car payments, cable and/or internet service, trash pickup and credit card.
These expenses, for the most part, are essential yet not likely to change in the budget. Variable expenses are the type that will change from month to month and include items such as groceries, gasoline, entertainment, eating out, and gifts. This category will be important when making adjustments.
Do you have a good budget?
You know you have a good budget, if it is flexible, realistic, easy to follow and you are able to save money!
Drop me a line to tell me how you make your budget work!
Teri Ann Renee Paisley
Gleaner online writer