How to Prepare a Personal Financial Budget
Budgets are used for many reasons and by many people. Businesses, both public and private, need budgets to meet their financial goals. Personal budgets and budgets are similar in that they help in reaching a specific financial goal by identifying spending habits and detecting problematic areas.
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Instructions
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Prepare a list of your fixed monthly expenses. Fixed monthly expenses usually include payments, such as house or rent payments, car payment, tithes, life or health insurance and childcare expense. These fixed expenses do not change from month to month.
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Next make a list of your variable expenses. Variable expenses change from month to month. These expenses usually include food, utilities, recreation or entertainment, clothing, medical, automobile gasoline, credit card loans, savings and sometimes auto insurance.
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Add your monthly fixed and variable expenses together. This will give you an idea of your total monthly expenses.
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List all available monthly household income. Be sure to include income from rental property, as well as interest and dividend income. Remember to include money earned from the sell of hobbies and crafts if you receive the income monthly.
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Add all of your available monthly household income. This will tell you how much available income you have each month.
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Compare your total income with your total expenses for the month. You want your income to be more than your expenses. If this is the case, you only need to adjust you spending to reach a desired goal. If your expenses are more than your income, you will need to implement a plan to decrease the amount of money spent on expenses.
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Tips & Warnings
You can reduce your expenses by paying close attention to your spending habits. You may wish to keep a record of your spending habit for about a month. Sometimes, impulse purchases are the culprit. Impulse buying includes magazines, clothes, purchases of music and movies, and things you did not plan to purchase.
References
- Photo Credit still life with calculator image by Astroid from Fotolia.com
