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					How to Create and Use a Budget




If you want to keep more of your money, you need to learn how to set up and stick to a budget. Becoming more
aware of where your money is going helps you make better choices about how to spend it. Budgeting does not
have to be complicated; you just need to learn some simple techniques so that you can begin making changes.




The simplest way to budget is to keep track of your expenses and income on your computer or smartphone. There
are lots of programs you can use to help you keep track of what you're earning and what you're spending. These
programs automatically download transactions from your bank accounts and categorize them for you. You just
have to go through and make sure all your expenses are in the correct category.




Once you have been using this kind of program for a couple of weeks, you can look over your expenses and see
what you can cut. Look at entertainment and dining out before anything else; these two categories often drain
money that could be used better elsewhere.




You also need to learn how to prioritize your expenses. Essential expenses should always come before
non-essential expenses if you have limited funds. Essential expenses include rent, utilities, food and your
payments to yourself. Some of these expenses are large, so you may have to save money from each paycheck for
them. For example, rent and utilities may take you all month to save for.




Don't skimp on paying yourself, however. It's important that you put a small amount of money aside for
yourself out of each paycheck so that you stay motivated and keep working on your financial plan. Set aside
anywhere from $5 to $25 for yourself out of each check; you can either put this into a savings accounts for a
bigger reward or spend it on a small present for yourself.




Categorizing your expenses is important; make sure that your budget plan allows you to do this. By
categorizing, you can see how much of your money is going to essential expenses, as opposed to unessential
expenses. You can check how much you're spending on utilities versus how much you are spending on going to the
movies, for example. This helps you figure out which expenses to cut first if you need to cut expenses.




In addition, categorizing your expenses makes it much less overwhelming to look at how much you're spending.
If you don't categorize, you may have a lump sum of $3,000 in expenses and not know where to begin to cut. If
you categorize, however, you can easily see that $400 worth of restaurant expenses is excessive.




It's not easy to make financial changes to your life, but setting up a budget can help make this momentous
task a lot easier. A budget isn't something you do once and forget; it's a living, breathing document that
you change as your financial situation changes. If you follow the tips above, it can help you build your first
budget so that you can begin the process of resolving financial problems.

				
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Description: Personal Finance articles