By EOIN LEHANE (Via Ezine Articles)— Whether you are trying to get out of debt, or you are saving money for something special, you need to be on a budget. While many of us know this, so few do it properly and so many more do not do it at all. It is a common misconception that being on a budget means that you are poor; this is not the case. The biggest companies in the world prepare budgets and spending plans. They know the value of telling their money what to do, before their money starts to do what it wants.
This is really the key point of budgeting; If you create a written budget, in advance of spending, then you are telling your money where to go, what to do. If you do not, then you will find your money doing whatever it wants and want it wants to do it seems, is to disappear.
The first critical step is to commit to preparing a written budget, before any money is spent. If you are sharing income or spending with a partner, then it is essential that you are both in agreement on this. Your budget can be a simple sheet of paper with your expenses listed for that particular month, or it can be an EXCEL spreadsheet or some other form of budgeting software. It doesn’t matter how you do it as long as you do it.
In your budget, every single expense must be accounted for, you do not spend a single cent unless it is in your budget. As an example if you buy one coffee a day in work and the cost is $2.00, you would budget for coffee at $2 x 20 days = $40 for coffee and so on.
It is absolutely essential that you have a budget category for annual expenses like Christmas, Birthday presents, Car insurance, Car repairs Clothes etc. These expenses do occur and if it is not in your budget, you do not spend money on it, so make sure you have included everything.
Once you have listed every single expense that you can think of, your balance should be zero. Your income minus your expenses should be equal to zero. If you have money left over, this money should go towards debt repayment, if you are in debt or savings if you are not in debt. If your balance is a negative amount, you are overspending and you need to cut further. When you have finished this step and your budget is balanced to zero, you need to stick to it. The easiest way to do this is to record your monthly spending as you spend it and compare this at the end of the month with your planned spending. Again this can be done with a pen and paper or my personal preference is the spending tracker app. You must record all spending as it occurs or you will forget.
I do not expect you to get your budget perfect at the first or second attempt but by recording your spending and comparing it to your budget at the end of the month, you will eventually get an accurate budget that you can stick to. Remember, keep at it and it will work for you
If you would like to know more about budgeting or getting out of debt, Please check out the free bonus guide “How to get out of debt and stay out” at http://www.escapethatdebt.com/FreeGuide.
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