by Dawn Hawkins

Created on: June 18, 2009

Budgeting your income each month will help keep track of all your expenses and give you the ability to see firsthand where you could save money and where you may need to add to other items. Personal budgets can turn into quite a long list when you add everything that you spend in a month on one sheet. Budgets let you plan for future purchases and cut backs. Sometimes, households need to cut back just as much as businesses do in order to stay afloat.

Planning your personal budget leads you to better money management. It can be a show-stopping event to see how much you actually spend in a month's time. Seeing your budget in writing will have you reevaluating how you spend.

Here are some of the basics of personal budgeting:

Setting the Budget

Be realistic as to where you set your budget. You cannot exceed the limit of what you income is. If this happens, you will have to re-work the entire sheet. Give yourself enough breathing room to put money into your savings account. Your savings account does not count as income, it counts for debits because this has to come out of your paycheck or other sources of income. Start the list with the absolute necessities such as food, electric and water.

The next step should include things that aren't necessary to survive physically, but are necessary in order to gain the essentials. This could include gas for your car, car payment and maintenance on your car. These top two things are the most important in order for you to get by.

The next list should be your luxuries. Luxuries can be defined as things you don't need to survive but make your life more comfortable. Instances such as internet connection, cable and cell phones are on this list. These are not necessary items. These things make life easier, but life can move forward without them.

After you have listed the details of your budget, subtract the expenses from your total expenses from your income. If you have come out even or over your income amount, you need to re-work the budget. You should always have money left over.

Habit Changes

After the budget is set, you will have a chance to track your spending over several months. Take a fresh look at how much you are actually spending as compared to how much you would like to spend. You will be able to see a clearer picture and adjust your expenditures to allow for more breathing room. A tighter budget will put money more money in your savings in the case that you may need it down the road.

Sticking With It

There is no point in putting a personal budget together unless you plan to stick to it. Avoid impulse buying. Plan out what you want and how to obtain it without destroying your entire budget. Set aside an second savings for "extra things". Leave the urge to buy things that you don't need long behind. Motivate yourself to savings by remembering the tough lessons learned in the downturn of our economy. Saving money for what you want will leave the credit card payments out of the picture and more money in your wallet. Stick to the budget no matter what else you do. If you follow through with it, you can realize a huge savings in the end.

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