The budget is an indispensable tool if you want to keep your finances in order and achieve your financial goals.
And for all budget spending it is needed. You need it if you want to buy a house, a car, take a trip, in order for everything and get out of a budget could have serious financial difficulties.
To develop a budget, it is very important to provide good information about your income and expenses in this way to know where your money comes and how they are using.
The budgeting process is very simple, and just follow the steps below
This includes bank statements, investment, payroll services like electricity, water, gas, etc., and any other information related to the origin of your income and expenses. With all this information you can determine a monthly average of both revenue and expenditure, and is the amount that you will use as a reference in your budget.
If your income depends only on your salary, you can register your net income. But if you also receive bonuses, commissions, dividends, etc., do not forget to register.
The same should do if self-employed, or have multiple sources of income due to various jobs you can have. You must register the total income as a monthly amount.
This part has much to do with how you distribute your income.
Detailing all expenses you plan to do in the course of a month. This includes paying the mortgage or rent housing, the share of car, insurance, groceries, services, entertainment, laundry, savings, tithe, etc. In short, everything you represents a monetary exit.
Fixed expenses are those that are made every month, and whose amounts are almost always the same, plus they are a necessary part of your everyday life, such as housing costs such as mortgage or rent, car payments, cable, internet, insurance, mobile phone, etc .. These expenses are usually essential and is unlikely to change in the budget.
Variable costs are those that change from month to month, and include purchases of groceries, gasoline, entertainment, restaurants, gifts, etc. This category will be very important when making adjustments, for their variable nature.
If the total revenue column is higher than expenses, you’re on the right track. This means that the surplus can be used to prioritize other areas of the budget and increase savings or increase debt payments to eliminate them faster. If, however, expenses are higher than income, it means you need to make several adjustments.
If you’ve identified and recorded all your expenses accurately, your ultimate goal is the total of your income is greater than or equal to the total of your expenses. This means you’re not spending beyond your possibilities, and therefore have savings and investment capacity.
If, however, you find yourself in a situation where your expenses exceed your income, then you should check your variable expenses to identify areas you can cut back. Nor would it be a bad idea to seek ways to increase your income.
It is important to review your budget regularly, if possible using a worksheet, to ensure that it stays in order and in accordance with your goals. At the end of the first month, compares the costs incurred with which you have created in the budget. This exercise will show what areas tuvistes success, and what else you need to improve.