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Basic Money Management

Updated on January 11, 2013

Creating a Personal Budget

Have you created a personal budget? While many people love money, few actually like managing their income and creating a personal budget. If you haven't created a personal budget, you definitively want to consider at least setting up a basic personal budget. A personal budget can help you organize your financial information in order show where your income is coming from as well as where it is leaving. By setting a budget you can cut unnecessary costs and save tons of money.

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The First Step to Creating a Better Budget

Unfortunately, most people have the misconception that budgets are hard to create and often not worth the trouble. However you can often create a basic personal budget in an hour by following a few simple steps.

You want to begin by collecting all your financial information. This includes any information that pertains to bills, incomes, expenses, and pretty much anything that has too do with your money. Also be sure to collect information about any investments or bank accounts you have. The more information the better.


Knowing Your Income

When creating a budget, you obviously want to know how much you learn before you pay any bills or expenses. Record any source that contributes to your monthly income. This is a very important step and should be taken seriously. Try not to estimate, but rather find the exact statistics based on salary, hours worked, etc.

After that you want to complete your list of expenses. Expenses are basically anything you spend money on. This includes recurring bills such as car payments and insurance, as well as any miscellaneous costs such as a new dishwasher. You can further divide these expenses into expenses that are recurring vs one time expenses.

Monthly Income vs Monthly Expenses

Now that you've compiled both your lists of income and monthly expenses, you should be able to find out how much you truly bank per month. If your income is significantly higher than your expenses than you are in good shape. If your expenses outweigh your income then you might be in a little trouble.

If your income is lower than your expenses you definitively want to try and fix that. However since you've collected information about your expenses, you should be able to pinpoint the largest expenses and try and eliminate them.

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    • Ms._Info profile image

      Ms._Info 

      5 years ago from New Jersey

      I'm very bad at managing money.I'm so bad at it that hubby had to take over managing our bills. It's something I need to work on and your tips are very helpful.

    • SolveMyMaze profile image

      SolveMyMaze 

      5 years ago

      Nice Hub. A budget is a thing everyone really should have to factor in their ingoings and outgoings.

      I would agree that an estimate in this case doesn't cut it since you're not getting the true measure of just how far your money will go.

    • Cyber Scribe profile image

      Cyber Scribe 

      5 years ago from Cyber Space

      I always think I should budget, but then unexpected things pop up. You just need to make sure you spend less than you earn every month. It sounds easy, but it's not.

    • Learning in Life profile image

      Megan Smith 

      5 years ago from Florida

      I have a budget for every little thing! I love budgeting! It amazes me how many younger people have no idea how to do it. I thought it was something you learned high school economics

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