Related Reading: A Spreadsheet Template To Effectively Manage Your Finances
Follow these tips for how to create a monthly household budget and you will be well on your way to financial well-being:
- Put it down on paper. The first and most simple part of the budgeting process is to get all of the pertinent information in front of you. This means listing your monthly expenses and income. Do not leave anything out. Many people make the mistake of not including what they think are insignificant expenses, like that morning cup of coffee on the way to work or that quick bite to eat through the fast-food drive. Think of it like this: that five dollars you spend on coffee and fast food every day, five days a week, adds up to one-thousand, three-hundred dollars a year! Is that significant enough to include in your budget? Absolutely.
- Set your priorities. Once you list all of your expenses and compare them to your income, it is easy to see how much you have to work with. This is the time to set goals and put them in order of what’s most important to you. Want to save up for that European vacation you’ve always dreamed of? Want to pay down those student loans faster, or get out of credit card debt? Or perhaps you’d like to set some money aside each month and place it with an investment broker in planning for your retirement? Having all of your expenses in front of you makes it very easy to see where you can cut some fat in order to nourish your goals. Also, knowing exactly how much money you have to contribute to your goals each month makes it possible to set up a time-table for accomplishing them, and there’s no greater motivator than that.
- Make a plan. Once you’ve chosen which goals to focus on, decide how you’re going to go about allocating the money to each one. You have many options, from setting up separate savings accounts to putting a money jar on your closet shelf. Decide what’s best for you and remember that, whatever your method, the most important thing for you to do is to stick to it! Keep a monthly flow chart and dedicate yourself to filling in all the blanks. This will make you accountable to the plan, and you will also have the benefit of seeing the results as you go.
There you have it! Creating a monthly budget is not only simple, but well worth the time it takes to put into it. Sit down today and plot out your own, and take the first step to securing your own financial well-being.
Deborah is a full-time professional writer with a passion for personal finance, health, wellness, and more. She is the founder of Write on the Edge and offers unique content solutions, article marketing strategies, andto her clients.