Budgeting 101: Tricks of the Trade

When laying out your finances, you need to make sure that you have a proper budget in place. This is important no matter how much money you make per month, from the person who earns six figures to the man living paycheck to paycheck. Unlike the assumptions made by many, budgeting does not mean that you need to cut out all of the discretionary spending in your life. Instead you just need to crunch the numbers, be honest with yourself, and be smart and aware when it comes to your money.

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First, you need to understand why it is so important to budget your money. Don’t think of creating a budget for your money as a mind numbing experience. The fact of the matter is that you will feel much more comfortable once you have this done. If you can properly understand where your money is going you will be able to put the money in better places.

Who knows, you might be able to free up some money for discretionary spending. You may even realize you are financially able to purchase that home or the car you have been dreaming about for all those years.When it comes time to start creating a plan for your budget, it is important to start writing out all of your monthly expenses; this will include your rent, car, insurance, phone, electric, or any other payments you need to make each month.

In the next step, you need to look at all of your income that comes in each month. Add all of the money you spend on gas, food and other items, and then you can start adding up the money you use for fun.

Budgeting isn’t really that difficult, and all you need to do is keep everything in order. Give yourself proper tracking of everything, and one of the ways to do that is to write down all of the money that you spend each week. You can do this by keeping a notepad with you or by collecting all of your receipts. Once it is all written out, you can use a spreadsheet to keep you on track. In most cases, you will be amazed, and seeing it laid out on paper will help. Many people end up rounding up their bills to make it easier to plan the numbers, and having it laid out in front of you will show the exact amount. Most people are astounded that they can save money in ways they never even thought of.

Once you have your budget, you can look at options to start saving money. The best way to start this off is by looking at your phone and cable bills. Look at what you really use and start comparison shopping. People often are able to cut out $100-$200 per month this way.

Next up is looking at your insurance providers. Automotive insurance is one of the best things to look at. With all the companies competing for your money, often times you can get the same coverage with another company for the same monthly rate.

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Many people start off their budget with good intentions. Then they start overspending and their budget goes out of whack. This is why it is so important to put a percentage of your income away each week for discretionary spending. Also, you need to budget a percentage of your finances each week for savings. It is all too easy to neglect putting cash aside for an emergency. Most people will find that it is smart to have four to six months of expenses saved up in case something unexpected occurs, such as losing your job. Simply having that money set aside will allow you to sleep easier.

One of the best ways to stay on track is to use cash each week instead of using your credit card or debit card. The ease of being able to use a plastic card often gets us spending money when we don’t need to. You might not think that spending a dollar here and there on a soda is a lot of money, but it adds up over time. Using cash allows you to monitor that money each week more efficiently. Also, watching the money change hands is a good reminder of where your hard earned income is going.

While these budgeting tips are enough to get you on the right track, you can never be forced into following a budget or saving money. You have to stay committed and dedicated to your budget, and stick to a plan. Only then can you benefit from the savings in the long run.

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