Monitor Your Spending with a Personal Budget?

Answer 1

When it comes to Personal Finance, some people look at the word �spending� as an evil and dirty word. In reality, everyone must spend in order to survive. The key is to develop spending patterns that allow a consumer to enjoy life while not spending himself into a financial hole. One of the best tools for controlling spending habits is a personal budget. With a budget that can be seen and worked with each month, it becomes easier to plan spending so that it does not get out of control.

The first step to controlling spending using a budget is to determine exactly how much excess income exists each month to be spent. Excess money is the funds left over after paying all of the monthly bills and expenses, and putting aside money to reach pre-determined financial goals. One of the most difficult parts of getting used to a budget is in realizing that a spending plan is a much more efficient way of monitoring monthly finances than trying to live week to week without a plan. It is important to realize that a budget does not take away the freedom to spend. A budget allows a consumer to spend responsibly and avoid the pitfalls of debt.

Expenses on a budget are considered necessary spending. They are items such as groceries, gasoline for the car, entertainment spending and savings. This is the part of monthly spending that a consumer must get under control and monitor using a budget each month.

Keep a spending log that outlines every dollar spent during the course of a month. Review that log to determine which numbers become monthly expenses, and which spending activities should be eliminated. For example, buying lunch at work each day is not as financially responsible as bringing lunch from home and saving the money.

Once the expense budget numbers are determined, they are combined with the regular monthly bills to determine how much the total financial obligation is for the month. That number is compared to the monthly income and the positive difference is how much can be spent on other items during the month.

A personal monthly budget should include a plan for setting a portion of that spending money aside in a savings account for emergencies or any future large purchases to avoid getting involved in high-interest credit.

Being financially responsible is not always fun, but monitoring monthly spending money can help a consumer avoid years of excess debt. Develop a personal budget that can be a tool to help monitor spending and maintain a positive financial outlook.