The Debt Advice Online Blog

Everyone needs to have a household budget. A household budget is the only way you can regulate your spending to be able to save for the future. With a household budget you will also be able to save up for those extras that you will want, like a family vacation or a new car. It is easy to begin a household budget—the hard part is sticking to it.

To begin your household budge, you will need to track your spending for one whole month. This will include all expenses such as subscriptions, dining out, and those morning coffees on the way to work. This is how you will be able to see how your day to day expenditures are adding up.

If you want to be able to see right away how much money you have to work with at the end of the month, sign up to pay your bills with direct debit. This way, you may also save money because many companies will give you a discount for paying this way. This will get the necessary bills out of the way and give you an idea of what you’ll have left.

To stay on track with a budget, keep a computer spreadsheet of your incomes and expense. Use this as a way you spread out your bills so that you don’t have to pay a pile of bills all at once. This is also the best way to plan and track those bills you will only have once or twice a year, like your car insurance of TV license.

Keeping a household budget will keep you from having to deal with overdrafts at the bank. Most banks charge for unauthorized overdrafts and you can prevent having to do that by keeping good records of your monthly expenses. If you are still in trouble and cannot pay some of your bills, you might want to consider looking into personal loans. Personal loans will give you the boost in income that you need for the time being, but remember to shop around for the best rates just like you would for any other type of insurance.

A budget will help you stay on track so that when you see a big ticket item, you will not impulsively buy it and then have to take it back or not pay a bill because of the cost. If you make sure there’s room in your budget for some extra money to play around with, you will be able to get those items that you want over time. If you are on a tight budget and cannot afford many of the things that you want, throwing away the budget won’t help. Sticking to that tight budget will give you a better financial stability in the future. Make sure that you have what you need, but don’t feel bad about having to wait for those little extras.

Remember that a budget is not keeping you from spending your money—it is simply helping you to spend it on the most important aspects of your life.

Technorati Tags:
regulate spending, high expenses, pay your bills, saving money, monthly budget plan
Add to: | Technorati | Digg | reddit | Furl |

Define Your Monthly Income

If you are going to draw up a monthly budget planner, step one in the process is figuring out what your income will be. Your most basic income will be your salary, and your spouse’s salary, if you’re married. Then there are things like bonuses, dividends, interest, and any sort of investment income you might have. If you work for a company that reimburses you for various expenses, include that in your monthly budget planner. Gifts might not be a regular source of income, but it doesn’t hurt to include those, plus a column for “Other” as there always seems to be something that doesn’t fit into another category on a monthly budget planner.

List all of these headers in one column, then make a second column labeled “Expected” and a third called “Actual”. This way your monthly budget planner can keep track of what you expect your income to be, and what it actually is. The trick for good money management is in living within your means, i.e. not spending more than you can afford to pay each month. We all know that for big purchases like houses and cars, that may not be possible and may necessitate you getting a loan. But if you do need a loan, then try to get one on which you can afford to pay the monthly repayments in full each time; that way you are not building up further debts. If you have to pay back interest on a loan and on top of that you acquire late payment penalties, the only one who is benefiting is your credit company.

Outline Your Expenses

The next step in putting together your monthly budget planner is to figure out what money you need to cover your expenses. So, you make a column of everything you pay out on a regular basis. That will be things like mortgage/rent, home insurance, auto insurance, auto payment(s) (if any), auto expenses (gas, oil etc.), bank charges, groceries, clothing, childcare (if you have any), and then your utilities bills.

It is important to break these costs down individually: gas, phone, water, electric, cable TV, Internet, sewage, garbage, and any others you might have. If your monthly budget is out of control and something needs to give, you will find it easier to look for small savings you might make on utility bills if they are itemised. This might be turning if lights in empty rooms; adjusting central heating thermostats and timers to save on heating bills or being more careful in your telephone use.

Then there are the little things that you may not have every month, but you need to keep track of. This can be things like eating out, visits to the barber/salon, medical/dental, entertainment and recreation, household repairs, gifts you give, travel expenses, subscriptions to magazines, spending money, club membership dues, and taxes. These are things which are usually not essential, and so some room for savings can be found in these when planning your monthly budget, but remember not to cut back on these things completely; after all, they are often the thing that make life worth living!

If you have credit cards or student loans which you need to make repayments on, or some other long-term bills, list them on your monthly budget planner too. As with your income, then put down a column for the expected expense, and one for the actual.

An Expense You Don’t Expect

One thing that many people overlook when drawing up a monthly budget planner is the “expense” of savings. Too often people don’t think about saving; they put it off thinking they can do it another time. Yet, it is something you need to be aware of, and should include in your monthly budget planner.

Technorati Tags:
define monthly income, disposable income, do i need a loan, monthly bonuses, monthly budget planner
Add to: | Technorati | Digg | Yahoo | reddit | Furl |