Create a Household Budget without Losing your Lifestyle
A household budget can, in the words of most, collapse a lifestyle. Who wants to eat ramen noodles in order to have enough money to save for a child’s college fund? Of course, many claim that in a fast paced society, the likelihood of actually having a budget and sticking with it is about as possible as winning the lottery on every scratch off ticket. We have put together some resources to assist you when you create a home budget.
As a rule, a budget should look at all sources of income and calculate every expense. Of course, cash withdrawals can be accrued to a weekly allowance of sorts, so you do not have to ledger every mocha latte. A family budget can show where the money goes, while dictating just how much should be given to each expense. For instance, a good budget will revolve around percentages. A home budget along with personal finance budgeting should use approximately 60% of income to pay for all expenses. The remaining 40% should be used to build savings, fund IRAs or Mutual Funds, and create an emergency reserve for unexpected costs.
Budget Worksheets and Trimming Costs
Budget worksheets help to see where the money goes. If we can identify our main expenses, add to that our credit debt, school loan obligations, and other extraneous expenses, we can see the picture of our finances. This picture can be blurry without working everything out on paper. To ease this process of developing a home budget, there are budgeting software solutions on the market that make budget worksheets all but obsolete.
Some popular choices for budgeting software include MS Money, Quickbooks, and Quicken. Many of these software versions have personal finance budgeting included in the overall pictures. As a user goes through their bank statements, check register, and credit card statements inside the program (most of these can go online to download this information), they categorize their expenses, thus seeing where their money goes.
If you do not want to fork over extra money to purchase budgeting software in order to track your expenses, Microsoft Excel works as an excellent tool for budget worksheet creation on your desktop. Microsoft even offers free templates for budget worksheets.
Create Personal Budget without Losing the Lifestyle
A budget carries with it many negative connotations. We may have grown up hearing our parents argue about a budget or have our own similar experiences. As time goes on, the necessity to create personal budget remains very clear. There is no escaping the reality of not having enough money to pay for an emergency tire replacement or dental visit. With a budget we can plan for the worst, and be ready to pay for those circumstances without using credit.
Budget Planning and Personal Finance Freedom
Budget planning can free our minds from the stress of wondering if we have enough money. A good personal budget allows us to plan for major home improvements, simple car repairs, or to save for our child’s future education. Good personal finance budget awareness strengthens responsibility and encourages positive money saving techniques. A home budget should account for all expenses, create savings opportunities, and encourage responsible money management. With applying budgeting principles, an individual can often surpass their savings expectations and maintain the lifestyle they desire.
– Work with percentages to see what percentage of your net income goes towards necessary expenses, like utility costs, mortgage/rent payments, automobile loan and insurance fees.
– If your monthly necessary expenses are under 60% of your net income then you can effectively plan for your future.
– Create a timeline of when your loan expenses will be paid off in full, then calculate how much of a percentage that will add to your home budget. Hopefully for those over 60%, then the paid off long term loan will drop the necessary expenses down under 60%.
– Do the same as above for all credit expenses and create a soft limit for their use. Many credit card companies offer a limit usage declaration, which effectively limits the cards use during the specified time period.
– If you have more than one credit card, then try to use only one for expenses, and leave another for emergency use. Create a budget for each card, and also a timeline for when it can be paid off in full.