Budgeting for current and future financial needs is a basic principle in money management. Knowing how much money can be allocated to expenses, investments, savings and entertainment can minimize financial stress and offer a blueprint for personal financial success. Establishing a successful budget requires some up-front time and attention, then occasional adjustments as your financial situation changes. Budgets can be created and managed through multiple methods, so select one that meets your personal financial needs and lifestyle.
Yearly Budget
Scope out your financial requirements and anticipated income for the coming year and establish monthly spending brackets. Preparing a basic budget for the year minimizes your planning time and accounts for the once-a-year expenses that may be overlooked when only budgeting on a monthly basis. Include some flexibility in your budget to allow adjustments during the year.
Envelope Method
Designed for people who struggle with overspending, the envelope budget system is a simple way to minimize the reliance on credit while controlling spending. Each paycheck is divided precisely into different budget categories. These category names are placed on physical envelopes and the funds from paychecks are placed into the envelopes according to the budget. In order to maintain strict controls, spending is done in cash from the envelopes. Once the money runs out in each envelope, no further spending is allowed in that budget category.
The 60 Percent Budget
The 60 percent budget limits spending on essential items to 60 percent of income. Essential items consist of food, clothing, shelter, charity, taxes, insurance and household expenses. Ten percent of income goes directly into retirement savings, 10 percent into long-term savings, 10 percent into short-term savings for unpredictable or irregular expenses and 10 percent goes toward entertainment. Since everything is placed into basic categories, this type of budget does not require much planning or oversight to manage.
Budget Planners
Use a planning spreadsheet or software to help establish a budget. These programs can help minimize the task of classifying expenses and allocating funds. Enter all your financial information including income, expenses, investments and savings into the program. After entry, you should be given an overview of your current spending categories and how much you are saving or losing every month. Generally, these programs help you to modify your spending and create a budget based on your entries. This type of budgeting requires recording all spending and income on an ongoing basis for accuracy.
0 comments:
Post a Comment