Making a personal budget that works for you is a good way to stop yourself from getting deeper and deeper into debt. Many people waste their hard-earned money without thinking much about how much they will have left until their next paycheck. They often run out of money and have to borrow from someone to pay bills or feed their family. The problem with this kind of spending is that it makes you more likely to get into debt, which will make it harder for you to pay off your debts when you need to.
This is not the right way to take care of your money. By making a personal budget, you can start to plan all of your finances and decide which things are most important. You will get to a good place financially that you will enjoy in the end. First, you need to take a careful look at your needs from three different angles:
- Long Term
- In the Short Term
- Medium Term
Ask yourself some questions about what your goals are. What do you want to accomplish over time? What do you want your budget to do? Make a list of all of these things, and then you can start to figure out how much money you have.
List your monthly income and expenses, starting with the most expensive and most important. Then, list your expenses from most important to least important. Find and use a way to decide what to do first that works well for you and your situation. Write down how much you spend each month on things you use. Write down your sources of income and how much money each one brings in every month. Put your money coming in on the left and your money going out on the right. Add up each column, then subtract to find the difference. You will need to figure out if you have a surplus or a deficit.
Figure out what you can actually afford and make changes to the budget. Once you have a budget that will help you, print it out and stick to it. When making a personal budget, sticking to the budget is probably the most important thing. If you don't stick to the budget, you won't have helped your finances at all. Instead, you'll probably end up with more debt.
