Tips Series: Budgeting Tips to Make the Most of your MoneyBy Contributor • Dec 19th, 2010 • Category: Budget
Here is todays post on Budget Tips
To many people, budgeting is burdensome because it makes them do extra paperwork and work with numbers. Worse, it makes them put control or limit to how they spend money.
But all that work delivers important benefit that can enhance your life, especially if you are living on limited income. Budgeting provides you with a goal to achieve with your money. It prevents you from spending unnecessarily on unimportant things so that you can have the important things.
If you are working on limited money, trying to solve your debt problem, planning to retire early, and trying to make the best use of your money, you should budget.
In a nutshell, here are some guidelines you should consider to make an effective budget:
Have a goal in mind in budgeting. Your goal could be as simple as being able to make ends meet or being able to save enough to invest and be comfortable when you retire.
Help your budget make you aware of your financial situation, income, expenses and habits. Be aware of how you spend money and how others want you to spend money. These others are your friends and neighbors, advertisers and marketing people who want you to buy their product – even if you can live without them. See if there is anything you need to change in your spending habits in order to live within your budget.
Make sure you have all the information you need to create a budget. This information includes an accurate account of your spending, and more. Many sites on the internet gives detailed tips on how to budget your income like BudgetingIncome.com.
Small spending like coffee, gum, lottery ticket, and a soda can add up. Keep a spending diary to track them down.
Make sure you account for hidden expenses and automatic payments. Examples for this are utility fees, taxes, interests and bank penalties. Forgetting them can mislead you into thinking you have more money than you actually have. Look at automated payments by your credit card to reveal “leaks” in your budget.
Account for emergency expenses. Things always happen that are unplanned, and you should have an allowance for these emergency spending.
Be realistic with budgeting. It’s useless to create a budget you know you can’t follow. No matter how much limited your budgeted money is, allow for spending on things that makes your life fun such as occasionally treating yourself to a movie, or buying coffee. Also figure out what kind of spender you are so you can change your habit and come up with a realistic budget you can stick to.
Change your budget to reflect financial conditions. If your income decreases, there are some spending you have to forego or consume less. If your income increases, you can give yourself more of your wants, or better yet, you can save to build wealth.
Ronaldo Tumbokon is a freelance writer whose interests include personal finance, parenting, music and the internet.
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