Prepare and defend against a disaster


For anyone who wants to regain control over their finances learning to prepare a personal budget is the first step. Unfortunately most people do not consider a budget to be that important and as such they tend to live paycheck to paycheck, always wondering where there money went while waiting for that next payday. If this is how it is around your house then creating a monthly household budget could set you free, financially speaking.

The other thing that seems to scare most people away from doing a budget is that they think it's some sort of complicated mathematical formulation. But in reality this could not be further from the truth. A budget is in actuality rather simple. In its most basic form it is simply a comparison of income and expenses. Just two simple columns on a sheet of paper.

That's all you need to get started, a piece of paper or notebook and a pencil. On one sheet of paper you write down your sources of income for the month and add them up, which of course gives you your monthly income. On another sheet you are going to create your expenses list. This is a little more involved, but again it is not rocket science, it's just a matter of gathering all the necessary information. You need to divide your expenses up into relevant categories and these categories can be subdivided to further help you get control over your expenses.

Below is a sample of how you might list out your budget expenses.

Housing and utilities

– Mortgage payment or rent
– Insurance
– Taxes and electricity
– Natural gas
– Water and garbage pick up


– Cable television or satellite service
– Internet access
– Dining out
– Bars clubs

– Sporting events, parties, lessons and recitals

Health and Beauty

– Hair-cuts, perms etc.
– Make-up
– Medical, dental, vision, weight loss, diet products
– Nutritional supplements


– Car payments, insurance
– Gas
– Routine maintenance, repairs
– Air travel
– Rental cars, public transportation


– Telephone
– Cellular phone
– Voice mail


– Groceries
– Cleaning supplies
– Laundry, dry cleaning
– Home improvement projects, towels, linens


– Credit card payments
– Other loan payments
– Child care, items for baby / elderly
– Allowances for children, book clubs, magazines, music, etc., fast food
– Investments, vacation, spending money, contributions to church or charity
– Gifts (Christmas, birthdays, anniversary, etc.)
– Emergency fund
– Cigarettes.

This gives you a good idea of ??how to structure your budget, but your individual expenses may be different, so customize it to fit your needs.

Once you've got your monthly income and expenses added up you can immediately see if, like a good majority of people, you are spending more then you are making. If this is the case you can now use your newly created budget to start cutting out those expenses that are not really necessary. There are many areas that we overspend on everyday and seeing it written down can help start start culling out those unnecessary expenses.

When you prepare a personal budget for the first time do not get discouraged. You may not like what you see but this is the perfect opportunity to get your financial affairs back in order. Setting up a personal budget tells your money what to do and when to do, giving you control to create a bright financial future.


Source by Andrew Bicknell

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