Personal Finance and How to Live With a Budget
Personal finance is the financial management in which an individual or a family unit is required to obtain, save, budget and spend money resources over time by taking into account various financial risk and future life events. When planning for personal finances, you need to consider the suitability of your needs to a range of banking products such credit cards, saving accounts, checking investment and insurance. A budget can help you crush your outstanding debt and even help you take charge of your financial future. A proper budget may not necessarily require you to spend less instead, it requires you to make more effective financial decisions. In this article, we are going to give you tips on how to live with a budget.
1. Know your income
You can only live with a budget that you can afford. This means that in order to know how much you can spend, you need to know how much you earn and that is after you have deducted taxes and any other expenses.
2. Create a list of expenses
Create a list of all your expenses such as house rent, food, entertainment, transportation among others. Be realistic in your estimation and if possible over estimate. Make sure you include all your expenses that to avoid being surprised in future when you realize later that there are some expenses that you forgot to include.
3. Make cutback if possible
After creating a list of all your expenses, scrutinize the list carefully and identify places when you can reduce your expenses. For instance, if you normally spend $1000 on entertainment, you can decide to reduce that expenses to $500 and save the rest of the money. Try to identify any expensive luxury that you normally enjoy and save the money. You can also cut your expenses by switching to more generic brands and eating home more frequently.
4. Leave room for emergencies The truth is that there will always be emergencies. Your child may fall sick or your car may get damage anytime. FINANCIAL EXPERTS recommend that you should always allocate some money to take care of emergencies so that you don’t end up spending your saving when an emergency occurs.
5. Set realistic goals
Now that you know how you earn per month and how much you spend and your expenses, it is now possible to set realistic goals. Set realistic goals on how much you are going to save per month and ensure that you stick by it. It is okay to have monthly, weekly or daily goals, just make sure that you stick with your plan. For instance, if you plan to set aside $100 dollars every week, make sure that the goal is realistic and stick by it.
6. Be discipline
Lastly you need to be disciplined if you want to succeed to live with a budget. It is very difficult to deny yourself from going to have drink with your friends when you know very well that you have some few dollars in your account. If you want to be successful as far as living with a budget is concerned, then you must be disciplined when making financial decisions.