Budgeting Your Money The Easy Way
Budget Your Money - Budgeting Tips
Budgeting your money may scare alot of people because budgeting your money is not easy, having to account for everything, finding out and having to deal with how bad their money situation really is and most people do not know how to budget money the correct way so their budget is so tight that there is no room to move when something happens to upset their budget.
What you are going to learn about in this article is an easy plan to budget your money that is very flexible and one you should have no trouble keeping to.
Budget Your Money: Create an emergency fund
The first thing to do is create an emergency fund!!! . What is this guy on you are possible thinking. He has not even started to show me how to budget my money and he wants me to create and emergency fund, where am I going to get the money from, I am deep in debt and have no money. Before you stop reading let me explain.
Think about when why even the best budget fails, normally it is when you get an unexpected event that you had not counted on in your budget - (something breaks down and needs repairs, you have to travel to visit a sick parent, fluffy the cat gets run over so there are vet bills, you can add the million and one other things that could happen).
Having an emergency fund means you have the money for these events. Where are you going to get this fund? Stop reading for a moment and think about all the stuff you have around the house that you do not use, gather it all together and sell it. You should aim to create a reserve fund of at least a $1000.
Budget Your Money: Bills you must pay
Get all your bank statements, bills and other financial papers together. The first thing to do is make a list of all your bills that you must pay each pay period because it would impact on your life if you did not. This is things like rent, mortgage, utilities, gym membership etc.
The gym membership has been included because if you even if you are not going to the gym if you signed for a 24 moth membership until the time is up you have to pay or they will get a debt collector onto you. So add any contracts that you cannot get out of.
Add this list up and hopefully it should be less that 50% of your combined income. If it's above 50% you will need to find ways to reduce you expenses in this area or increase you income.
Why Budget for less than 50% Must Pay Bills
Sally and Tom are married. Sally earns 70% of their income and Tom 30%
If Sally lost her job she would only have to find a job that pays 20% of her pervious salary for them to still pay their MUST PAY bills, or Tom could increase his income.
If their MUST PAY bills were 70 or 80% she would have to find a job paying 40 to 50% of her pervious salary just to pay their bills without luxuries. Finding a job like this may be almost impossible in really hard financial times.
Budget Your Money: Savings
The savings component of this budget is 20% or greater
The budget for Savings is split into three parts as below
5% of your total income to savings for things you want, like a trip
10% to reduce debt then when you are debt free build your emergency fund up to 3 to 6 months of income, then use it to make extra payments on your mortgage if you have one.
5 %savings for your retirement
This is the least you should put into each
Budgeting your money : Now the Fun Part
You have budgeted about seventy percent of your income so what do you do with the rest.
All your bills are paid and you are putting 20% of your income away for savings so the rest is yours to spend. It is a good idea to keep it separate from your other money so that you know how much is left at any time so that you can choose what to spend it on and make it easier to budget what you spend it on.
Get Out Off Debt Website
If you would like to read more about how to reduce debts to be debt free clink the link to go to the authors site about getting rid of debt - http://personalfinancebeat.com/