by Alejandra Betancourt

Created on: July 11, 2009   Last Updated: July 14, 2009

Having a budget is essential in maintaining a healthy financial life. If you are just starting out on your own or are a senior citizen depending on social security; knowing where your money is going will help you make better money wise decisions. In this article I will provide you with valuable tips on starting a budget and how to use it.

In the United States, we are known as the credit capital. Most of us live and depend on credit to make our payments and everyday purchases. The majority of households have some sort of credit which might be credit cards, line of credits, auto loan, mortgage and etc..... Some credit debt is good for example our mortgages. We all hope than in the long run our homes will have equity in order to sell them. Other credit like credit cards are not so good since we can easily live outside our means and rack up those balances. It is very important to understand and know what is your net pay in order to avoid living outside your means and relying on credit. Your ultimate goal will be to pay off all your debts and pay only with cash, check or debit card. You may use a credit card since they offer added security, only if you are good about paying it off every month.

Take Home Pay

Lets first start with what is your take home pay. Your take home pay is the money you have left over after all deductions have been taken out including; taxes, medical premiums, life insurance and so on. Figure out how much your monthly take home pay is including your significant other's plus any other income you may have. When you have figure out your take home pay, the next step would be to list all your expenses including debts and saving. Ideally, your expenses need to be less than your take home pay. If it is not, you will need to take a closer look where your money is going. It is a good idea to keep track of your expenses in a journal or on a spreadsheet. This will give you a better picture of where your money in going and what you can do to reduce it. For example, if you notice you are spending too much money eating out for lunch, take your own lunch to work.

Putting Your Budget Together

There are many tools out there that will help you plan your monthly budget or you can even make your own. I have found excel to have many helpful budget spreadsheets. I personally use one of them.

If making your own spreadsheet be as specific as you want. It will make it easier to keep track on how much money you can spend when it comes to miscellaneous

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