Managing Your Money – How the “Smart Guys” Budget!


A greater focus has finally been placed on responsible money management as a result of the recent economic troubles, and consumers are finally realizing how important it is to make wise decisions that could impact their financial stability. Nothing is more frustrating than worrying about upcoming bills and being completely consumed with stress and angst. Developing a budget may seem like a fairly simple concept, but the fact remains that few individuals will actually stick to the one that they need to. The following will help anyone become a good money manager and lay out some key points that should be considered when designing a budget.

The first step in creating a budget is determining how much income is generated on a monthly basis, and the simple fact of the matter is that many individuals fail miserably in this first step. It is important to understand that only income that can be relied upon should be counted. A common mistake is to include overtime, incentives, and bonuses that may not be paid every single month. If a budget is developed and based upon a higher income level, there will be no savings potential and all of the bills may not end up getting paid. An individual should know what their usual monthly income is, and this is the figure that should be used for budgeting purposes. If a budget is based upon regular income, any extra monies can be spent on elective expenses and savings.

After determining how much money will be coming in every single month, the next logical step is to list all of the fixed expenses. Installment loans, such as car payments and house payments, are easy to budget for because they do not change from month to month. Any other bills that are the same every single month should be placed into the budget first. After the fixed expenses are all recorded, it is next necessary to include all of the variable expenditures that must occur every single month. Consumers need to keep in mind that this does not include food or gasoline, and that this category should be filled with utility bills and other regular expenses. For the bills that vary every month, it is normally a good idea to budget for the usual amount plus a little extra. Nobody wants a surprise when it comes to their utility bill, and this strategy will help them prepare.

Living expenses should be recorded in the next section, and these include food, gasoline, and other miscellaneous costs that arise every month. A common mistake is to fail to plan for the other routine expenses that often arise, such as doctor visits and routine maintenance for the vehicles. Budgeting a small amount for these expenditures will help relieve some of the stress associated with worrying about how to pay for the unexpected. A certain amount of the budget should also include a monthly figure that will be set aside for major auto repairs and other emergencies. This emergency fund should be contributed to every single month, and it is normally the best idea to allocate funds to this account before paying any other bills.

The important part of budgeting is to be as accurate and honest as possible, and failure to do so is going to negate the whole process. Few consumers truly understand how much money they spend every single month. Keeping careful track of all of the income and expenditures can help point out where the potential problems lie, and this is necessary if financial stability is ever going to be achieved. A responsible individual will look at the budget they have designed and designate areas that could possibly be reduced or eliminated. A budget is not a one time task, and smart consumers know that they will have to continually revise and update their numbers. Staying on top of everything takes a little bit of work, but the positive impact that it can have on a life is certainly worth the effort.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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