Managing My Personal Budget: a Secure Plan for Financial Peace of Mind
22 November 2009If you are reading this, you’re most likely going through slight financial stress and looking for a way to gain control of your finances. Developing and sticking to a monthly budget has always been one of the best methods to do this. A sound budget is an essential tool for managing money, one that has allowed me to survive even on limited funds. One of the most crucial things that I do every month is managing my monthly budget, this has allowed me to systematically meet all expenses, grow my savings, and control debt.
I usually plan my budget for the coming month towards the end of the month. This will prepare me with my expenses in the upcoming month. It’s not a good idea to produce a budget after getting paid because, too often, that flush feeling of getting a paycheck results to uneccessary and spontaneous spending before the paycheck ever reaches the bank.
I start my personal budget by outlining all the disbursements that must be paid on time like, loan repayments, utilities, insurance payments and motorcar loans. These are the essential things that I must pay to keep a comfortable roof over my head. I like to pad these requirements to create “money back” after paying the bills and, if costs increase out of the blue, I’m always covered.
Next, my budget is subjected to a list of discretionary things I need to cover but could live without if absolutely unavoidable. These items include monthly savings deposits, credit card repayments, and donations to charity. These things are also necessary, but in case of emergency I could put them off for a short time. By paying credit card companies the maximum instead of the minimum, I keep my credit score high and my debt low.
My budget does not include the cost of food, clothing, or entertainment. These expenses get covered by what’s left over and that’s that. Some months involve lots of beans and rice, slow-cooker meals, free or cheap entertainment, and only one inexpensive piece of clothing . This strategy of handling my monthly budget has worked out very well over the long term as long as I observe it scrupulously.
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