Why its important to Budget ...

[Tech_gurl]

If asked what you spent on eating out and groceries this past May 2011, would you be able to find the answer quickly and easily? Too many people don’t know how much they spend on these expenses and others each month. Why? Because they don’t have a budget; or, they don’t use it. Eating out, groceries, and many other expenditures will almost certainly vary each month and can run up a hefty credit card bill or deplete a bank account if they’re not tracked throughout the month and compared with their respective budget allocations.

Therefore, setting and following a budget is very important for ensuring financial health. A budget gives you boundaries for spending. For instance, if you only have $200 a month to spend on food, then that’s all you have! Period. Following your budgeted amounts will help keep you out of financial trouble.

If you don’t currently set and follow a monthly budget, here are some words of assurance: after a few consecutive months of doing it, it becomes easier to do. The first month can be hard if you’ve been living without one for years.You may think: I earn my money, I deserve things, and I’m not limiting myself!Yes, you earn your money, you do deserve things, but you must limit yourself and only buy what you can afford to avoid a world of financial headaches. Even extremely wealthy people have to limit themselves. If they bought everything their hearts desired, they’d be broke a lot sooner than you might think.

So, let’s get down to business. Do you know what you earn after taxes each month? Do you save any money each month? It’s commonly known that you should save at least 10% of your net income each month. And you may be thinking: I’m only 24. I have so much time to save, so I can wait and enjoy life’s pleasures now.Actually, you shouldn’t wait to start saving, even if it’s less than 10% of your net income to begin. The sooner you start, the more you’ll have when you need it later for emergencies, for retirement, for investing, for whatever life may bring you in months or years to come. And when you take a disciplined approach to saving money each month, you will find ways to have fun now—just within limits that allow you to save too!

Many people who do not budget each month end-up worried about whether or not they can make it to the end of the month before their money is out. That’s no way to live—and you don’t have to! Just set a budget and truly follow it to the best of your ability each month.

Starting your budget is easy. Here’s how:
1. Figure out your monthly income after taxes (your net income).
2. Determine how much you spend onfixed monthly expenses (e.g., mortgage/rent, phone, car payment). These are the expenditures that don’t really change each month, and you’re obligated to pay them unless you plan to dramatically change your lifestyle by, say, moving to a cheaper home; selling your car, etc.).
3. Figure out whatyour variable monthly expensescost you (e.g., groceries, entertainment, clothing). These expenditures can vary based on how you handle your money; therefore, they can be more under your control than fixed expenses (think: you can potentially spend less on these each month.)
*Note: If you’re not sure how much you spend every month on things like groceries, entertainment and other variable expenses, simply write down what you hypothetically would be comfortable spending each month.
4. Add up the expenses. Then subtract them from your net income. Hopefully, you have some money left over and creating your budget will be easy. However, if the numbers show that you are short on money, you need to figure out if you can lower or eliminate some of your expenses, or start earning more income.

[glowworm2k]

For the monthly bills, don't forget to ask the question, "Could I be happy with less?" This is particularly important when it comes to everyday extras, like television, mobile phones, etc. Asking yourself simple questions like, "can I make do without the extra channels?" or "can I make do with less data roaming or fewer text messages?" or "can I make do with a higher deductible on my insurance?" will help you to find savings on your monthly bills. It might not be a lot of money, but when you multiply the monthly savings X 12 payments per year, it adds up fast.

We got rid of extras, like voicemail on my partner's cell phone (I choose to go without a cell phone), fewer cable channels (eliminating ones we never watch), and a higher insurance deductible on the home/auto policy. We now have more money to put towards savings each month and hardly notice the difference.