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Planning a Budget

This article provides general guidelines on how to successfully establish a monthly budget to follow as regards to your expenses. In order to set it up, follow these simple steps:

Step 1

Take a piece of paper and write down all your sources of income. You should put down the amounts of any incomes from business, salaries, home wages or rentals, alimony, residuals and etc. Additionally, you should also write down the amounts of savings expenses and household expenses that you incur throughout the month.

Step 2

Take a second piece of paper and write down all the expenses that you incur during a month period. This may be difficult, since no one can exactly remember all the small purchases done throughout the month. Sourcing your income is the easier part, but once the money enter your pocket it is difficult to determine how they go out from there.

Divide the piece of paper into four columns. Title the first one as "Fixed Expenses". In it, write down the expenses you incur on the payment of loans, mortgages and so on. All expenses that you are required to pay each month are to be included in this column.

The second column should be titles "Fixed Variable Expenses". In it, include all the monthly payments you make about food, gasoline, utilities and etc. All the expenses that you are required to pay each month but vary in amount should be included here.

The third column should be titled "Occasional Expenses". In it, write down all the monthly payments you make on clothing, entertainment, medical bills and etc.

The fourth column should be titled "Credit Card Expenses" and should include your costs on credit card purchases and fees you should pay for its service.

Step 3

Compare both your income piece of paper and your expense piece of paper. Do they overlap? Are there any gaps? If so, you may start to wonder where exactly did you money go? In order not to ask yourself such a question keep a detailed record on both your fixed variable and occasional expenses. Avoid compulsive spending in order to save the balance of your finances.

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