How to Budget Your Money

One of the important aspects of saving money is budgeting it. If you’re spending more than your saving, well, you aren’t doing yourself any favors in your quest to save money! You really need to calculate everything you’re spending, down to the last cent, because as I’ve said before, it all adds up.

But how can you actually budget your money, what are the steps for it? It’s easy to say ‘count your spending’, but not so easy to implement, unless you know what you’re doing.

• Calculate what income you’re getting – not only from your regular earnings, but any other income, such as coming from savings interest, child support (if any), tips, overtime money, anything that is considered ‘extra’.
• Make sure you can identify all your expenses – this includes housing, utilities, taxes, house repairs, extra purchases (cars, computers, etc). Keep every single receipt. Now it is a good time to learn an efficient filing system (buy a cheap binder where you can save all these papers in).
• Now you need to compare your income with your expenses – What is more, income or expenses? If income is more, you’re on the right track. But if expenses are more, this is where the red flag should come up, as this is where you need to start saving big time, by cutting back on extra spending.

Unfortunately there are so few people who ever think of budgeting, which is pretty much why there are so many people in debt. Very few of them realize that they spend too much on worthless expenses, because they are not budgeting and don’t see the forest from the trees, as they say.