Many people are sacred when they hear the word budgeting, it is not something that should scare you. You should learn to love your budget and let it start working for you to help make your money grow.
There are many different budgeting sheets that can help you focus your mind and sometimes they can help and other times they can scare you with too much information.
Understanding a budget
The concept of a budget is that you are able to balance your money and the end result should be zero. This will have taken into account all your savings, bills and living expenses.
Once you have practice it won’t take you long to create your budget each month. Some people have elaborate spread-sheets others prefer the paper method. There is no right choice it is just the one that suits you the best. The best type of budget is one that you understand and can make work.
You need to make sure that you are paying money each month towards any debt that you have outstanding as well as saving for emergencies and for your future.
If you have a budget then at the end of the month you will have the same amount of money each week for your shopping as you did in the beginning of the month. It is important that in each budget that you are saving up for those bills that come around each year, many companies will charge you interest each month if you spread payments over the year. If you save up each month for the bill then you will save money on your bills each year.
What budgeting enables
Budgeting enables the user the chance to plan their future and to learn to live within their means and the more that you are able to save each month and the less you will owe in debt. This will enable you to make your money work harder for you each month.
This will mean that you will have more access to your money each month; you will know where you need to place your money to pay for bills that are due each month and you will need to have a separate account where you can put money for the bills that you are saving up for. As long as you are aware of the money that you are saving for then you can group this all together, this potentially could give you a better rate of interest.
Emergency accounts are vital; you are looking to hold three to six months living expenses in these accounts. That way any money that you are looking to invest long term will not need to be touched if you need access to money short notice for an emergency. This will save you having loans and finance to pay for repairs or replacement items that break, this will save you money on paying interest on these items and loans.
Budgeting is not there to scare you into submission but to help you develop a strategy so that you can make your money work for you.