Mastering Your Budget: Practical Tips for Living Within Your Means

In these tough economic times it is important to be mindful of one’s spending habits and what better way to do that than to create a budget. Budgets help us to plan and itemize or spending based on our income. At the end of the month, you may find yourself asking where did your money go. In order to answer that question, you need to budget. Budgeting allows you to track how much money is coming in, and it also allows you to see where your money is being spent. Most of the money coming in goes to basic necessities such as housing and food. But it is also important to prepare for emergencies and support other financial goals, such as saving for your first home, repaying debts, preparing for your children’s education, and planning for retirement.

Budgeting will help you to meet your daily financial needs and plan for the future. Begin by determining your regular income. Include that of your spouse or partner as well as regular income from other sources. Make a list of all income sources and amounts. Next, calculate your regular expenses, save all receipts and expenses for one month. If necessary, carry around paper and a pen in order to keep track of expenditures. Housing expenses will likely be your largest expense, especially if you own a home. Here is some of the expenditure to think about and budget for:

Housing Expenses: — your mortgage payment as well as property tax and home owner’s insurance — monthly rental payment if you do not own a house — utility services (electric, water, etc.) — telephone, internet, cable — home repairs and maintenance

Transportation Expenses: — car loan payments — car insurance — fuel expenses — maintenance and repairs — public transportation

Family or Personal Care Expenses: — family care insurance (health, disability, life, dental, other care) — doctor, dental, eye care, hospital costs, co-pays, and dedctibles

— prescriptions and over-the-counter medications — child care

Living Expenses: — food — home living supplies — clothing — education-related expenses%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

Recreation Expenses: — ordering out

— outside entertainment — cigarettes, beer, wine, liquor — birthdays and holidays —travel, weekend, day trips — gambling, lottery tickets

Other Expenses: — credit card payments — student loan payments — home equity line or loan payments — personal loan payments — alimony, child support payments

— other assessed taxes — charitable donations

All of the above may not apply to everyone but hopefully it will get you thinking about where your money is going and determine what your priorities are. Don’t be overwhelmed by the task. It may take a few months of tracking to figure out exactly where money is being spent or where it should be directed. The important thing is to track your spending in comparison to your income to make sure they are compatible. If you find your expenses are extremely high compared to your income, you have to cut back on some unnecessary spending. Hopefully this exercise in budgeting will help you to maintain healthy spending habits while saving for a rainy day.

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