This is a topic that most people avoid until they realize that there future financial goals are non-existent and their retirement plan involves working far past when they want to. It’s when the sense of financial panic sets in that most people make Nigdi Packers Movers Household Shifting budget, and while it’s better late then never, stopping the financial bleeding needs to happen much sooner to truly see your financial dreams come true.
Many people get stuck on just getting started. They tend to over complicate what making a budget actually is before they ever begin. Fortunately it is not as hard as some people make it to be. Here’s how you get started with your household budgeting plans.
The easiest way to set up a household budget is by looking at your cash flow on a monthly basis. Since we all seem to think of our finances this way it is best to plan around each month and it is simply looking at income versus expenses over that time period.
Determining you monthly income is normally the easiest part of any budgeting process. This is the amount of any and all paychecks you receive over a month’s time. If you have a variable income because you work on commission or own your own business you can use an average of the last three months to get this number. Be sure to include any other income as well such as child support, disability income, etc.
Next comes the part that nobody likes; figuring out the household monthly expenses. Start by listing out everything you spend money on in a month’s time. Rent, mortgage, car payment, phone, electric bill, credit cards, groceries, entertainment, medical expenses, clothing, dry cleaning, personal care (haircut, nails, etc.), gifts, etc. Some of these expenses are fixed, meaning that they are the same every month while others are variable. For your variable expenses such as groceries go back three months and calculate the average amount you spend each month.
In order to better understand where your money is going it can be well worth the effort to make subcategories for those expenses that can be further broken down. As an example your food category can be broken down into groceries, eating out, snacks from the vending machine, and anything else you may spend money on. The more detailed you are the better handle you will get on your finances.
Once you have totaled your monthly income and expenses subtract your expenses from your income and see what is left over. This “moment of truth” as many people call it can be quite sobering because in almost all instances no one has any idea of exactly how much they spend each month and on what. All of a sudden those little $5 to $10 purchases at the local coffee shop or eating out for lunch hit you right between the eyes and you have that “Ah-Hah” moment.
If your finances are out of control and you are tired of living paycheck to paycheck make household budget to take back control. It is your most powerful tool for managing your most powerful wealth building tool: Your money!