When creating your own personal budget, do not be overwhelmed! Keep your goals in sight and let these tips assist you to begin changing your life with an effective money plan—Your Budget.
Make the habit of getting receipts for every single purchase, no matter how small or unimportant it seems. Keep these receipts in one central location such as a drawer, file folder or box. This helps simplify the task of keeping track of expenditures made by more than one person in your family. It also gives the details of your purchase enabling you to break purchases down into categories of spending.
Determine your method of recording and tracking your budget. There are budget books available at your office supply store for the “pencil and paper” types. If you have a computer, you can create a digital version of your budget book using spreadsheet software such as Microsoft Excel. Additionally, software is available that lets you record your purchases and assists you with the creation of your budget based on transactions you have enter into the system. For more information, read “Budgets with Personal Finance Software.” Whichever method you choose, find the one that works for you. Then set up a schedule so you are recording your transactions on a consistent basis. The number one rule here is to “KEEP IT SIMPLE.”
Goals—Long-Term and Short-Term
Determine what you desire your long-term and short-term goals to be. This should be tailored to fit your needs, values and priorities. Keep in mind that these goals are what you wish to achieve. At the completion of your budget, you need to be prepared to adjust your goals, if necessary, to meet your financial reality.
Honesty is the Best Policy
A major contributing factor to the success of your budget is being honest with yourself in determining spending needs versus spending desires. Be realistic when establishing the spending categories. In some cases, be prepared to make lifestyle changes for the short-term in order to reach long-term goals.
You should involve all members of the family when determining and prioritizing goals. They should also be involved in choosing the amounts to allocate for each spending category. A successful family budget requires the family working together.
Savings should always be a part of a budget. The Consumer Credit Counseling Service suggests that 5% or more of your take home earnings should be saved. Remember, the unexpected can and usually does happen. Savings should also focus on your goals such as vacations, investments and retirement.
With all this food for thought, you are ready to create your budget. Good luck to you and happy saving!
For more information regarding this topic or any other tax-related issue, please call Henssler Financial Tax & Accounting Division at 770-428-4025.