HOW TO MAKE A BUDGET

BUDGETING is a tool that increases disposable income, which in turn increases your financial freedom. A budget is a plan on how exactly you are going to be spending every dollar that you earn. And yes, you must do one, there’s no way around it. Why is this so important? Because, as Dave Ramsey said, author of “The Total Money Makeover,” managed money works harder.

You need to create a budget based on your actual circumstances and follow it as closely as possible. But remember that budgets are plans, and plans change quite frequently. So right before every month begins, plan out on paper exactly how every dollar is going to work for you. It’s all about organizing your monthly expenses based on your income. This will help you achieve your goals and fulfill your everyday needs and financial responsibilities.

Factors that you need to take into consideration when starting a budget include:

• Net Income: the portion of your income that you get after all taxes and other expenses such as medical benefits have been withdrawn by employer.

• Fixed expenses: these are expenses that are the same every month such as rent, or a cable bill.

• Variable expenses: these are expenses that occur regularly; however, they can vary on a monthly basis on personal use. Examples include grooming, clothes or cell phone bill.

• Incidental expenses: expenses that happen occasionally like gifts or travel expenses.

• Needs: An obligation or a necessity that must be met, such as food, rent or medical expenses

• Wants: To have a strong desire for something, such as clothes, electronic gadgets or a food craving.

To help you with budgeting you may want to order the Monthly Budget Tracker booklet to assist you with keeping track of your expenses and it will also help you create a more realistic budget. Once you know what your expenses are like or even if you are unsure, try our Home Budget Calculator. This calculator will let you see what your budget is like and it might give you ideas on where to cut back.

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