How to budget your money

How to budget your money

Many people believe that money isn’t important. The truth is, it is the most important thing in life! Simply, you cannot live without it. In order to make your life better, you must organize your budget. The first thing you should do, is to track your spending history. Collect all bills you can have, add records from your credit card as well. There are several software that can help you. Some of them are: Mint, Microsoft Money, Ace Money and Quicken.

Document your budget for the last 12 months. Then, analyze your expenses for the same period. Expenses should be divided into those that are necessary (bills, electricity, food and etc.) and those optional (going out, gadgets and etc.). When you are done, you can start creating your budget.

The first, you will make the preliminary budget. Calculate the average expenses per one month and add 5%. For example, if your average monthly expenses are $210, you should estimate that they are $220. Now, you know how much money you have left every month. Make some short-term goals. For example: $8.000 should be in an emergency savings fund, 5% of each paycheck in a savings account and $6.000 for your vacation. You can use some tax benefits. For example, you can put your money directly from your paycheck to personal IRA or 401(K).

You also must try not to spend more than you have planned. Maybe it is hard, but you can do it. There are some ways to reduce your expenses. If you don’t need something, don’t buy it or stop paying for it! This will save your money.

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