The basics of personal budgeting

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by Deborah Lawwill

Created on: October 05, 2009

Personal budgeting is a task that can be mastered by anyone with a little patience and practice. Creating a budget is a great way to keep your finances in check and to set financial goals for things you may want to accomplish in the future. Especially in today's time, having a sound budget means having a sound mind. No matter if you're rich, poor, middle class, or college student, having a budget can only help.

First, determine your comfort level and your current position. Are you content with the basics or do you need more financial flexibility? Are you living paycheck to paycheck or enjoying a steady job and financial security? Would you like to save up for something important such as a car or a new home or perhaps a trip to Europe? Even on the most meager of salaries, when you play your cards right, you can have everything you need and then some.

Cutting Corners:

Calculate your basics. Your basics are rent (or mortgage), electricity, groceries, clothing, transportation, and a phone. Your extra expenses can be cable/internet, entertainment, miscellaneous purchases, restaurants, etc.

Now of course you don't want to be miserable, so create a budget for those extra expenses. Find out what you're paying right now. Where can you trim costs? Perhaps, you're paying too much for rent. Take advantage of the economy and if possible, find a cheaper place to live. If you're looking to move do it in December as it will be incredibly cheap. Replace all existing light bulbs with energy efficient ones. Watch your energy usage. If possible, go to a super Wal-Mart for groceries instead of pricey grocery stores. For decent clothing try outlet stores such as Ross or Bealle's Outlet. It's cheaper than Wal-Mart and the quality of the clothes is better because they sell mall-brand. Research phone service rates in your area. See if you could find cheaper phone service. Try to find cheaper car insurance. Smaller insurance companies will charge less than big name companies.

For those extra expenses be sure to use coupons when possible. Keep your eyes peeled for deals and specials and take advantage of them. After cutting corners see where you've saved money. Then create a new budget. You should also have savings in your budget.

EXAMPLE

Rent: $700

Electric: $110

Groceries: $400

Clothing: $100

Transportation: $300

Phone: $60

Entertainment: $50

Misc: $50

Savings Fund: $200

Cable/Internet: $80

Monthly Budget = $2,050