www.cashcolor.com

Tips To Learn How To Make A Budget

admin — Tue, 13 Sep 2011 00:00:00 +0000

When making a budget always keep in mind the reasons for the budget. Write down your goals and the expected amount of time to reach each goal. Analyze the income in and income out ratio. Look for ways to save money and meet goals faster.

Remember budgets are not set in stone and sometimes they must be adjusted because unexpected events happen in life. Before starting the budget, list the reoccurring expenses such as the rent or mortgage, insurance cost, utility bills, child expenses and car expenses. A luxury expense such as visiting the hair solon goes on a separate list. This is a list of expenses that can be limited or eliminated. An item such as an annual membership fee to a club is included on the reoccurring list of expenses.

From the first two lists, determine what can be cut down or eliminated to reach the goals on the third list. For example, let-s say on the goal list is to save 1000 in one year. Because most insurance companies offers a discount when insurance premiums are paid in full, the extra money saved from paying in one lump sum can be used towards the 1000 savings goal.

Budget Doesn’t Need To Be A Bad Word

admin — Sat, 10 Sep 2011 00:00:00 +0000

When many people think of budget, they assume that it is some restrictive or punitive word that is being imposed on individuals who are not fiscally responsible. However, that is so far from the truth. Budgets, if used correctly, can be a tool to help individuals properly manage their finances so that they can start building wealth.

Again, it is a misconception that only the financially irresponsible people utilize budgets. Many individuals use a budget so that they can properly allocate their money and know how each dollar is being spent. This is the key to building wealth and becoming fiscally responsible. When you make every dollar accountable and you are not just wantonly spending money you will start to spend more wisely and stop making impulse purchases. As a result, you will be able to save more money. Needless to say, you cannot save what you spend, and if the money is in the bank instead of in the pockets of a major retailer, you will eventually start to see you money grow and it will start working for you (i.e. interest payments).

When individuals and families have a budget this also means less stress because of the organization of a budget. You have already designated where your paychecks will go and typically the bills are the first thing that are paid. After the major bills are paid, then you should pay yourself (i.e. save), and then you can assess from what is left over where the remainder money should go. Also, a budget helps you determine if your debt to income ratio is out of whack and you can begin making determinations on what items can be eliminated to free up extra money.

So, for these reasons alone, a budget is not a bad word, it is actually a very good word.

A Budget Helps You Manage Your Money

admin — Fri, 09 Sep 2011 00:00:00 +0000

Living with a budget takes time to get accustomed to if you have been used to spending freely until you have no more money to spend. A budget means spreading out your money in a planned manner. Most budgets start by depositing a fixed monthly sum into savings. That savings is determined by your bills. Your budget works on paying off your monthly bills. When all those bills have been paid and the sums subtracted from your available money, you are left with your discretionary income. You can spend what is left or you can save it or you can save part of it and spend part of it.
Learning how to handle your money by using a budget teaches you how to manage your money. Your bills are necessary expenditures. Bills are payments due each month like mortgage, utilities, and insurance policies. You have other expenses like food and gas but those don’t usually come due each month. Working in a budget teaches you to wait until you have paid your bills before spending money on food and gas. You might think that food is essential but you can wait until you have paid your bills before hitting the grocery store when you live with a budget.

A Budget Doesn’t Need To Be Constricting

admin — Thu, 08 Sep 2011 00:00:00 +0000

A budget that does not need to be constricting is a type of flexible budget. The budget has a goal but its terms are more flexible that a constricting budget. The budget changes with the various expenses associated with the budget. The amount of money in the budget may remain the same but the allocation of the money changes.

A standard budget list includes the rent, insurance payments, child expenses and utility bills. Person care expenses such as gym memberships and spa days may be on the list but are not as reoccurring as the standard items. A saving goal is another expense usually included on the list. With a non-constricting budget, the person doing the budget has the ability to shift the budget to suit their needs.

For example, if the family wants to eat out more but don-t have the extra money to do so, the financial planner will take the money from one of the other expenses such as the spa expense to cover the cost of eating out. Instead of pulling from one source, money may be pulled from multiple sources. This allows the family to be flexible in their spending without going over their limitations.