If you're thinking about starting a personal financial plan, make sure you know why you're doing it. Some people start one just because it seems to be the mature thing to do, but these people are wasting their time. The purpose of budgeting is to get to a place where your monthly expenditure is less than your monthly income. A zero-based budget is a special kind of budget where you chart where all the money will be going each month to the very cent before you even use it. This takes a lot of commitment and groundwork, but in the end you will have a much better handle on your cash flow by knowing where every dollar is going. As you make the necessary changes due to the spending errors that will turn up, you'll enjoy the extra money which will help you make the most out of your monthly income.
As with most things which require discipline, it helps to have someone to check up on you to see how you're managing. Perhaps your spouse, one of your parents or a close friend could periodically sit down with you and the budget to see if you're sticking with it. When you look at where most of your frivolous spending occurs, you may see that it's usually when you're with a certain group of friends who aren't so careful with their money. If this is the situation, it would be wise to start spending less time with those friends - at least until you can establish better spending habits for yourself. In addition, it will be so useful to set a few short-term and long-term financial goals for yourself. Perhaps a long-term goal would be to save up for a down payment on a new house while a short-term goal could be having a pizza night for the family at the end of the month if everything in your spending plan is followed. You'll be surprised how little things like that can motivate you.
To begin, pull out your pay stubs from work, your bank statements and any other bills or slips that will be useful as you list the amounts in your budget. Write down how much money you make, even if from multiple jobs in a month, and include your spouse's income as well if you're married. Next write down absolutely everything that you spend in a month from bills to groceries and even luxuries like eating out and movies, etc. Then put all your expenses in categories labeled fixed (same amount every month), semi-fixed (amount varies slightly each month) and variable (amount that change considerably each month). If you're doing this with your husband or wife, agree straight from the beginning to be calm and considerate of one another. If your opinions differ on whether something should be included, rather write it down, and return to it later if necessary. In addition, it's wise to put a time restraint on how long each session is allowed to last. Most people will be tired emotionally after just thirty minutes. You don't need to get the budget sorted and established all in one day.
Try to think of everything when making your list of expenses - even occasions like anniversaries, birthdays, holidays and vacations when applicable. It's important to allocate some personal cash to both you and your spouse per month as well - even if it's only $25; it will still make a difference in both of your outlooks on the budgeting system you put in place. After you've made a detailed list of all your incoming and outgoing cash, begin dispensing the income on paper - writing down specific amounts matched to where the money will go. Do this firstly for the fixed and semi-fixed expenses, and then carry on doing the same with the variable expenses. Now you're ready to subtract your total expenditure from your total income. Hold your breath because the result may or may not be a positive number; however, even if the number is negative, know that it's part of the process to make necessary adjustments to the spending plan before it's complete.
If you are left with a positive number, congratulations! You and your spouse must decide where this extra money should go - whether to pay off specific bills or to save for that new lounge suite and entertainment center you've been dreaming about, etc. If, however, you are one of many who is left with a negative balance, go through the list of expenditure item by item, and decide which expenses are needs and which ones are wants. This is the most likely times of arguing with your spouse while making a spending plan with your spouse. Remember to stay calm, and be willing to meet each other in the middle. Like anything else in marriage, a team budget calls for some true give and take. Carry on removing wants off the list of expenses until income and expenses equal one another exactly. Now you'll not only know where every dollar has gone at the end of each month, but you'll be able to more easily plan for things in the future which will require some savings.
As with most things which require discipline, it helps to have someone to check up on you to see how you're managing. Perhaps your spouse, one of your parents or a close friend could periodically sit down with you and the budget to see if you're sticking with it. When you look at where most of your frivolous spending occurs, you may see that it's usually when you're with a certain group of friends who aren't so careful with their money. If this is the situation, it would be wise to start spending less time with those friends - at least until you can establish better spending habits for yourself. In addition, it will be so useful to set a few short-term and long-term financial goals for yourself. Perhaps a long-term goal would be to save up for a down payment on a new house while a short-term goal could be having a pizza night for the family at the end of the month if everything in your spending plan is followed. You'll be surprised how little things like that can motivate you.
To begin, pull out your pay stubs from work, your bank statements and any other bills or slips that will be useful as you list the amounts in your budget. Write down how much money you make, even if from multiple jobs in a month, and include your spouse's income as well if you're married. Next write down absolutely everything that you spend in a month from bills to groceries and even luxuries like eating out and movies, etc. Then put all your expenses in categories labeled fixed (same amount every month), semi-fixed (amount varies slightly each month) and variable (amount that change considerably each month). If you're doing this with your husband or wife, agree straight from the beginning to be calm and considerate of one another. If your opinions differ on whether something should be included, rather write it down, and return to it later if necessary. In addition, it's wise to put a time restraint on how long each session is allowed to last. Most people will be tired emotionally after just thirty minutes. You don't need to get the budget sorted and established all in one day.
Try to think of everything when making your list of expenses - even occasions like anniversaries, birthdays, holidays and vacations when applicable. It's important to allocate some personal cash to both you and your spouse per month as well - even if it's only $25; it will still make a difference in both of your outlooks on the budgeting system you put in place. After you've made a detailed list of all your incoming and outgoing cash, begin dispensing the income on paper - writing down specific amounts matched to where the money will go. Do this firstly for the fixed and semi-fixed expenses, and then carry on doing the same with the variable expenses. Now you're ready to subtract your total expenditure from your total income. Hold your breath because the result may or may not be a positive number; however, even if the number is negative, know that it's part of the process to make necessary adjustments to the spending plan before it's complete.
If you are left with a positive number, congratulations! You and your spouse must decide where this extra money should go - whether to pay off specific bills or to save for that new lounge suite and entertainment center you've been dreaming about, etc. If, however, you are one of many who is left with a negative balance, go through the list of expenditure item by item, and decide which expenses are needs and which ones are wants. This is the most likely times of arguing with your spouse while making a spending plan with your spouse. Remember to stay calm, and be willing to meet each other in the middle. Like anything else in marriage, a team budget calls for some true give and take. Carry on removing wants off the list of expenses until income and expenses equal one another exactly. Now you'll not only know where every dollar has gone at the end of each month, but you'll be able to more easily plan for things in the future which will require some savings.
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