Wednesday, January 7, 2009

Budget- part 1

I love budgets. I have different budgets and/or timetables for probably 20 different categories. I don't think this system is necessary to manage money. I just really like budgeting. Plus I've been doing this a really long time, so it comes very easily to me. The most important part of budgeting is just to have a budget. If you don't have one, make one.

A good budget does not just include how much you pay for your bills. Write down how much you pay every month for each bill that you owe. This is a good start. Then write down how much you spend every month for groceries, gas, household items, and miscellaneous. If you don't know, check your bank statements for the last 3 months and average. You don't need an exact number to the penny here. In fact, even with all the compulsive budgeting I do, I don't even have the numbers narrowed down any further than within $20 or so. You may think a budget involving how much you spend for groceries and gas seems ridiculous since the prices of these things have been fluctuating so much within the past year. While you cannot control the price of certain things (gas, for example), you can still control how you use your money. If you anticipate the price of gas going up (which it surely will), then over-budget. More on over-budgeting later.

How do you want to set up your budget? How often do you get paid? Are you salaried, or does your paycheck vary widely? A budget is a very personal matter. I'm not going to tell you exactly how to set up a budget that will work for your individual situation. I'm not even going to tell you how exactly my budget is set up. I will give you some general advice and pointers that do work across the board, though.

Let's say, for ease of demonstration, that you get paid $1000 every two weeks. You are salaried, so that number does not change. If you get paid every two weeks, that means, generally speaking, you get paid twice a month. So you take home $2000 every month. You should set up a monthly budget, which includes everything you need to pay for within the month, including savings and giving. From your monthly budget,t hen, set up two separate budgets, one for each pay period. Is your car payment due during your first pay period? When is your electric bill due?

Though this is an awkward time to leave off, this is also a lot to swallow all at once. After I started writing, I realized budgeting is going to take at least a week to fully explain! I'll write more on the subject tomorrow. Meantime, if you have any questions, leave a comment and I'll reply.

Thanks for reading.

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