If you’re reading this article, you are most likely searching for a way to gain control of your finances. The best way to do this is to create a monthly budget and sticking to it. A sound budget is a fundamental tool for managing money, one that has allowed me to live well 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 consistently meet all expenses, grow my savings, and eliminate debt.
I normally organise my budget for the coming month close to the end of the month. That gives me a heads up about what’s down the road. It’s not a good idea to prepare a budget after getting paid because, too often, that flush feeling of getting a paycheck leads 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, mortgage repayments, utilities, insurance payments and auto loans. These are the things I have pay to keep a comfortable roof over my head and continue earning money. I like to pad these requirements to make “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 necessary. An example are monthly savings deposits, credit card repayments and donations. Don’t get me wrong, some of these things are also necessary, but in case of emergency they can be omitted. By paying credit card companies the maximum instead of the minimum, I keep my credit score high and my debt low.
My budget will not include the cost of living such as food and entertainment. Ultimately, these items get covered by what’s left in the budget. 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 honor it religiously.