Creating a personal financial budget may not sound like the most pleasant experience in the world. But, you will need to set a personal financial budget to keep your financial house in order. Before you begin creating a personal financial budget, you need to realize that if you must be successful, you will have to give as much detailed information as possible. At the end of the day, you will be able to show where your money is coming from, how much you have and where it is all going. Here are some tips to help you create a personal financial budget.
Gather every financial statement that you can. This can include your bank statements, investment accounts, recent utility bills and any other details that define your income or expenses. You will want to create a good monthly average. So, the more information you can dig up, the better will it be.
Having followed the first time, it is time to record all sources of your income. Given that you are self-employed or have any other sources of income, you will need to also keep a proper record of all this. If you receive regular check payments where taxes are deducted automatically, you can either use the net income or the take home pay. Here, you will need to record the total income as a monthly amount.
You should also create a list of monthly expenses. It pays to write down all the expected expenses you plan to incur over the course of a month. For instance, your mortgage payment, car payment, groceries, utilities, entertainment, dry cleaning, auto insurance, college or retirement savings and all you spend money on.
Now, break your expenses into two types: fixed and variable. Fixed expenses are required monthly as your way of living. These include expenses such as your rent, mortgage, internet service, credit card payments, internet service and so on. Of course, these expenses are essential and will not likely change in the budget. Only your variable expenses will change from month to month. These include groceries, entertainment, gifts, eating out and others. You will need this category when making adjustments.
Total your monthly income and expenses if you want to create a solid personal financial budget. If you have more income than expenses, then you are good to go! You can then prioritize your excess to critical areas such as your college or retirement savings, or even pay more to your credit card to clear the debts. On the other hand, if you run more expenses than income, you will need to make some adjustments. You can actually cut down on areas within your variable expenses, in that case. This will afford you the opportunity to shave off a few dollars to add to your income.
Finally, if you want to create a good personal financial budget, you need to always review your budget on monthly basis. Review on your budget has to be done regularly to make sure that, you are on track. After your first month, compare your actual expenses with the amount earmarked for it in the budget. That way, you will know where to improve in your personal financial budget. Good luck as you spend less and save more for the raining day!