Moderate Your Debt: Produce a Personal Monthly Budget
If you are reading this, you are most likely having slight financial stress and looking for a way to gain control of your finances. Producing and committing to a monthly budget has always been one of the best ways to do this. Having a sound budget is fundamental for managing your finances, one that has allowed me to get on with my day to day life even on limited funds. One of the most critical things that I do every month is planning my monthly budget, and it has allowed me to systematically meet all expenditures, grow my savings, and eliminate debt.
I normally plan my budget for the upcoming month towards the end of the month. This will prepare me with my expenses in the upcoming month. It’s not a good idea to develop a budget after getting paid because, too often, that flush feeling of getting a paycheck leads to nonessential and spontaneous spending before the paycheck ever reaches the bank.
Start your personal budget by listing all the things that must be paid that month like rent, electricity bills, insurance policies, loan repayments and telephone bills. These are the essential things that I must pay to keep a comfortable roof over my head. I like to pad these necessities 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 needed. 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 excluded. 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 food, clothing, or 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 observe it scrupulously.
