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What is Personal Budgeting?

Budgeting is not only important for businesses, it has equal importance in an individual’s personal life. Personal budgeting is a method of monitoring and controlling your finances. This helps in monitoring personal finances and managing them accordingly. At times, we are so far away from having a budget that we end up broke within a week of being paid. This does not only leave you stressed out but it even affects your professional life. You either feel like you are not paid enough or there is no use in getting paid as you eventually end up with nothing within a week. Working and being broke leaves a drastically negative impact on an individual’s mind. Hence, it is important for a person to monitor their financial spending, analyze the problematic areas, and design a budget to improvise their financial position.

Assess your Current Financial Position

It becomes frustrating when you know that you are working on a low salary and your expenses carry the weight of a mountain. Low-income budgeting seems hard at an initial level. However, if you start small, you will be able to figure out your budget plan more effectively. 


Categorize Your Expenses

The first and best way to budget is to monitor your current lifestyle. Observe your spending habits and monitor your current financial position. Before making any budget quota, you need to list all of your expenses in the following categories.

Debt

Your long-term expenses are things such as student loans, car loans, unpaid bills, credit card balances and so one. Writing them down will give you a shockingly realistic yet clear picture. Don’t worry, they are not impossible. 

Monthly Bills that are Fixed Expenses

Monthly bills are something that you cannot avoid, they are things that you have to pay. However, listing them gives you a clear snapshot and you can even reduce them to a limited extent. These expenses include: rent, utility bills, cell phone plans, gas, and food bills.

All the Variable Expenses that you can Balance

Variable expenses are all of the leisure or emergency expenses that do not occur every month such as buying new clothes, dining out, buying new gadgets, getting your car fixed, and other fixtures and expenses that can occur at your residence. You cannot simply eliminate all of these expenses, however, you can manage a few of them and even look at which expenses are repeating quite often.

Identify Your Problem Spending Areas

When you are done listing all expenses, you will be better able to pick out the problematic areas that are straying you away from your budget every month. This problem could even highlight the areas that need your immediate attention. For example, if your car is asking your monetary attention every month, that means you need to get your car fixed properly once and for all before it breaks down completely.


Making a Budget

Designing a budget is not difficult, unless you don’t manage your steps carefully. Designing it step by step is very important as it will help you in designing a practical and applicable budget for your personal expenses. 

Step 1: List all of your liabilities and plan your gradual repayment method.

Once you have listed your liabilities, you are required to design your payback method. You should not overburden yourself by paying all of your liabilities together. Going for a crash repayment will leave you dissatisfied and you could end up adding more loads.

Step 2: List all of your necessary expenses.

Step 3: Prioritize your money goals.

Step 4: Cut your unnecessary expenses. Now, this is the most difficult part of it all. You might feel like it is practically impossible to cut down as every bill you are paying is a basic necessity. However, once you have crossed the monitoring step and all of the steps of budgeting, you will be able to clearly figure out the failure in your current spending methods.

Step 5: Be Frugal.


Tips to Create a Budget and Save Money without Going Broke

  • Be realistic
  • Always record every transaction
  • Bookkeeping
  • Control your spending
  • Don’t cut out all the fun
  • Take advantages of all the upcoming opportunities
  • Always keep on updating your budget as once you are done with repaying one of your debts, you might have some free cash to rearrange in order to pay another
  • Always keep emergency funds
  • It is best to plan your remaining cash into percentages


What are the Budgeting Benefits?

  •  You can focus on your desired money goals
  • You will be financially stable and organized within a few months
  • It will give you control over your money
  • You can arrange your expenses and spending
  • You will have extra cash in case of an emergency
  • You will have a clear picture of your personal finance
  • You will be able to improve your bad spending habits

Check out America's Best Bookkeepers

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.


 

 

The words wants vs needs written on sticky colored paper over cork board
Planning a yearly budget is often the difference between adopting healthy spending habits and wasting money on things that you don’t require. Creating a yearly budget is a great way to motivate yourself and set up financial goals, which is a major factor in leading a prosperous life. Before you can proceed with real budgeting, you need to have a basic understanding of how a budget works. If you have put aside $100 for your groceries and are continuously spending more than that, you would have to reallocate that money to groceries from some other expense to offset the difference. Obviously, you can increase the grocery budget for the next cycle but for this one, you would have to deal with what’s in hand.

Planning a Yearly Budget

Planning a budget requires a onetime effort and, once you get it right, you can always alter it a bit and plan for the next year. For someone who is looking to create a yearly budget, there are a number of methods to go about doing it.

  • Paper budget
  • Use a spreadsheet program like Microsoft Excel
  • Online budgeting software that is free of charge
  • Optimized budgeting software used by businesses

However, for a personal budget, you do not need professional software and keeping a simple excel sheet will do the job. It requires only minimal bookkeeping tactics. What matters is your ability to make sense out of past information and accurately predict your future expenses. Gather all your previous credit card statements, utility bills, bank statements, receipts and everything else from the past year and before, which will assist you in figuring out your past earnings and spending trails. The more information you have, the better your future projecting for a yearly budget will be.

Forecasting Expenses

If you are unsure about where and how to spend your money, there is a simple rule to follow. The 50/30/20 rule was developed by researchers and it has been found to be quite effective in its use. 50% of your income should go to your needs, 30% to your wants, while the remaining 20% should be saved. Of course, you can save a lot more than that or change the percentages to suit your needs but the main idea is to follow a certain plan and stick to it.

Controlling and managing your expenses is a critical element of budgeting. Forecast your fixed and variable expenses for your yearly budget. Some of the fixed expenses will be the same for each month such as mortgage payments or any loan payments. Make unique expense categories in planning a yearly budget to place each expense so that you are able to identify the exact reason for the occurred expense. You may need to create subcategories as well depending on the nature of the expense. Therefore, be prepared to innovate and create sections based on your ease. Some of the most common expenses are listed below.

  • Mortgage, rent, maintenance
  • Car loans, student loans
  • Food and groceries
  • Insurance
  • Personal
  • Utilities
  • Transportation

List all fixed expenses, variable expenses, and miscellaneous in separate columns. Any outstanding payments on your credit card are also counted as debt and need to be entered as a debt expense.

Scrutinize the Cash Flow and Balance the Budget

Subtract all expenses from the income and see how much cash you are left with. Once you know the exact amount you are left with, you can decide to spend, save, or invest it. Examine if your income is covering all expenses and, if it is not, you will have to rework your yearly budget. There are only two options in such a scenario. You can either earn more or decrease your spending. It is more convenient to decrease spending and most people will choose that, but there is always an option to earn more.

This is probably the right time to go back to the 50/30/20 rule. You cannot live without your needs, however, you are spending an enormous 30% on your wants which, if cut down, would most likely balance the income and expenses. Planning a yearly budget requires you to make adjustments in your lifestyle as well in order to balance things out. You can probably go a little longer between haircuts, cut down on the days you eat out, and even take public transport for work on some days. With a little creativity, you can come up with a number of ways to reduce your expenses and carefully balance things out.

Some of the variable expenses can easily be cut down. However, fixed expenses are harder as it’s easier to not buy a new fragrance than to shift your living to a lower rent or mortgage. The basic idea of a yearly budget is to bring your income and expenses to an optimum level where they balance out and leave you with enough cash to save or pay off your debts.

Planning for the Next Year

Planning a yearly budget is a work in progress and it would be wrong to perfectly place all of the categories according to your lifestyle and spending. You will learn from previous experiences and make suitable adjustments for the next year as you are now better prepared to face the challenge.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Mother wearing eyeglasses working at home office on laptop and taking care of her baby
In simplest terms, a family budget is a plan or statement that reveals how much income is generated and expended by an entire family. From necessities of life to comforts and from luxuries to bare essentials, a budget includes various items of both regular and irregular usage. Usually, parents are responsible for making a family budget since they have a wider experience in managing household tasks. A household budget is absolutely necessary for effective and optimal utilization of monthly paychecks. No matter how rich you may be, a household budget keeps your family going simultaneously while revealing the insights, i.e. how much money you are spending or saving on different aspects of life.  

No matter how much we may argue, most of the time we find ourselves amid severe agony and stark anguish in managing our family budgets. The ever-intensifying needs and irregular purchasing or spending patterns are the main reasons why we almost never meet our budgets. Sometimes, when we go shopping, we often end up buying more than our budget allows which disrupts all of our efforts in bookkeeping our money. Moreover, creating a budget is certainly hard and even much harder to follow because we often exceed our budget time and time again.  

Strategic Significance of Creating a Family Budget

Families all across the globe face extreme difficulties in managing their monthly paychecks. The reason is obvious; they don’t make a family budget. This happens to be a major blow to them in trying to save some money for their rainy days.  Besides saving them money, it actually drains their bank accounts which further creates a lot of problems. According to studies, more than 70% of people in America alone fail to meet their household budgets. This signifies that people nowadays not only need to create a household budget but also have to pay close attention and stick with it.  Only a balanced approach and a sensible mindset knows the significance of making a family budget and whoever does it successfully frees themselves from financial worries and anxieties. 

Whether you are an incredibly rich person or head of a small family, a family budget can help to save for the future. Whatever you save now will surely help you and your family in the future for meeting uncertain demands or necessities of life. It also helps to build a sense of collaboration among family members since all they work together to plan a budget that may serve as a financial guide for the entire family. Plus, creating a household budget takes time, mental effort and energy to get things right—the first time.

Tips that can help you Build a Workable Family Budget

Get Organized and Choose Your Budget Style

Before making a weekly or monthly household budget, you must know exactly how much money you can afford to spend in a particular month. One thing that has to be kept in mind before making your household budget is that you must set aside adequate time. You are probably going to make mistakes if you are in a rush. Moreover, you need to choose your budgeting style—whether you are going to use software or simply apply the traditional approach of paper and pen. However, it’s a lot more efficient to use electronic budgeting software instead of recording each and every transaction manually when making a family budget.

Evaluate Your Priorities and Set Benchmarks

Usually, necessities are always given a priority which will cover most of the budget. Once you have a good idea of your money, it will give you a clear snapshot of where it is actually going. You can then filter out details and see where you can cut costs. Bringing everything onto the table such as cash outflows, billing details, receipts or bank statements will help you know exactly where your money for the month is actually going. Moreover, your priorities must be dealt with separately as fixed expenses such as household rent, electricity and water bills.

Opt For Simplicity

Opting for a simple lifestyle will allow you to have greater command and control over the family budget. Whatever you are going to save for each month will increase your bank balance which means your future will not only be secure but healthier than ever. This way you can add up your savings, over time, and buy something substantial such as a new home, car, tuition expenses and other similar things.

Conclusion

Making a family budget may seem daunting at first. But, once you actually step into making one, it will come easier than you think. Fortunately, we live in an age where we have so many advanced electronic tools, software, and guides to make a household budget. By recording, monitoring and tracking the budget, you can determine where you can cut costs and save money for future needs.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Coins in glass jar for money saving financial concept

What Is Life Planning In Terms of Savings?

Having a strong financial threshold is absolutely necessary for prospering. The fact of life is that money matters. It keeps you going and enables you to protect yourself and your family from unforeseen circumstances or expenses. Saving money has its own strategic importance in life. Obviously, everyone wants to become financially secure and more stable in life. That’s why people tend to save money for numerous reasons which include; to become financially independent, to attend to emergencies and unforeseen expenses, to get out of debt, to increase their bank balance for investments and reserves, to save money for buying home, car, travel, education, retirement etc.

What Happens Without Planning Finances?

‘How much money do we need to save’ is probably the most discussed topic in peers, families, schools, colleges, and social gatherings. We need to learn the art of saving money for hard times or else we will probably get stuck miserably in severe financial crises. It becomes extremely challenging to recover from a serious financial crisis as your entire financial equation disrupts. One thing to be noticed is that not everyone is privileged enough to procure a regular paycheck. In fact, most people find it very difficult to make their ends meet or save money for hard times.

Always Save

In order to meet daily necessities, some people can budget their paychecks extremely well and they always manage to save a tiny portion of income for savings for hard times. Others face extreme level difficulties in maintaining a healthy financial life cycle, predominantly due to irregularities in monthly paychecks. Careful planning and budgeting are critically important for keeping a balance between your income and expenditures. Without creating a budgeting mechanism, you can never expect to save money—no matter how hard you may try.

Consistent Support via Financial Planning

According to the 50/30/20 rule, you must put at least 20% of your income into your saving account. By keeping 20% income as reserves, you will probably get stress-free from money-related concerns. It is absolutely necessary for people that do not have regular paychecks to make a finance budget in order to keep an eye on their income and spending schedules. There are hundreds of professions such as consultation, designing, freelancing, and commission based sales agents working for different organizations that don’t promise a regular paycheck. For such people, following guidelines can help them to save money.

Know Your Baseline

Your baseline includes bare essentials, without which you can’t live. When you don’t have a regular paycheck, you must keep a proper record of all transactions and examine your spending patterns. Your income may be unstable, but expenditures on different commodities or services are generally stable, predictable and repeatable. It includes major expenses, listed below.

Groceries: An effective budget can help you save a lot of money. Food is a category where costs can be cut significantly. Plan on buying those products that are absolutely necessary for you to consume for the month. Quite understandably, maintaining a healthy financial flow without a regular paycheck is hard, which even restricts you buying items of your own choice.

Housing and Utilities: Obviously you need to pay your monthly utility bills, rent or mortgage payments—which can’t be ignored. The costs that are incurred on house maintenance creates a major problem for you to maintain a sound financial life cycle. When you have budget issues, you can postpone them or manage to fix things yourself.

Medical: If you don’t have medical insurance, then heavy expenses on medical treatments can cost you losing each and every penny in your savings. According to a study, it is perhaps the number one reason why people go bankrupt. This indicates that life without a regular paycheck is seriously hard.

Transportation: To save money for hard times, you can use public transport instead of buying or managing a car. Going to work in your own car may be considered stress-free but looking at the cost and benefit analysis, it should be avoided.

Set Your Income Target

Everybody can roughly predict how much they can earn in a single month. The expectation should be kept high and income targets must be set so that you can get a clear picture of how much more money you need to earn to maintain a balance in your emergency fund savings. However, there is no guarantee, whether you will be able to meet your income target—all that you can do is predict it and work hard to earn it.

Open Multiple Savings Accounts

Opening multiple savings accounts is a secret tactic used to save money without a regular paycheck. The income that you earn from different sources can be smartly allocated into multiple savings accounts. A tiny portion of your income that you credit in those accounts in prosperous times will surely help you out in rough financial times.

Conclusion

Having a regular paycheck doesn’t necessarily guarantee financial safety and security. With irregular paychecks, you can still afford to save money for hard times.  For saving money, it is your will and motivation that matters, not just the regular flow of monthly paychecks.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

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A budget calculator spreadsheet helps to budget and makes it easier to follow or craft. Although it’s not mandatory, you can build your budget, with improvements after some time, with the help of such spreadsheet. The mandatory part is actually getting the basics right and then it’s up to you whether or not you prefer using a spreadsheet. That being said, creating a budget can be a daunting task in itself as many considerations are taken into account. For example, as a parent, priorities lay differently than a bachelor or a single person. It varies from situation to situation, but our guidelines can be applied universally.

Calculate your Income Flow with Budget Calculator

To build your budget, the very first thing you need to do is calculate how much money you expect to come in. By identifying this, a clearer path to bliss can be constructed with proper planning. After all, a budget is a financial plan which helps organize and structure payments and expenditures accordingly. It’s imperative to keep the numbers real. Any exaggerated or over-estimated accounts will create nightmares with the plan. It’s easy to overvalue the actual amount, so care needs to be taken in deducting social security, taxes, 401k’s, etc. Ensuring that an adequate amount remains in the budget calculator comfortably allows you to build your budget to make it to the end of the month. The net income is the amount that you are left with after deductions, which is exactly the amount you want to use in the budget.  Correctly estimate all of the money that is inbound; it could be freelance or part-time work. Regardless, all of it must be recorded and organized for expenditures.

Record Spending

By tracking and recording through organized categorization of your spending, many benefits are achieved such as adjusting. Recording all that you’re spending and tracking it will keep the accounts straight, repelling any situation that would cause deficiencies in the budget calculator. To build your budget and make it work for you, your expenditures should be logical, planned and recorded to allow it to give you a more wholesome picture of what the budget is doing for you. Start with fixed expenses. Anything that you have to pay on a regular basis is termed as fixed expenses. These expenditures don’t change but may go up. Everything like rent, utilities, amenities, etc.are all considered first when budgeting. There is little chance that one can cut back on these, but understanding the amount you have in hand makes life easier when spending under a plan. To build your budget, the budget calculator is made to eradicate any chances of error. In addition, enlist your expenses for groceries, gas, recreation, and entertainment. In this area, it’s possible to draw down or cut back expenses in order to be on the safer side and not go into debt at the end of the month.

Goals and Targets

Setting up goals and targets is one of the best things you can do by planning and working towards them. List all that you want to achieve this month, on a short term and long term basis, to build your budget for the budget calculator. Short term is any duration of time below a year whereas long term is over a year. Short term aims are things such as saving money for an Xbox or an iPhone. Long terms targets can be the kids’ education or marriage plans.

Plan

Without this vital aspect of budgeting, nothing will work. Planning out payments is a great way to secure stability and consistency in life. Knowing your fixed expenses will act as a guideline for all payments that need to be made in the month that presents itself. Plan your spending habits only to cover the most needed expenses.

A budget calculator and the need to build your budget can easily be facilitated with MS Excel. It is a wonderful spreadsheet and tool that users can use to create their own specified needs.

Check out America's Best Bookkeepers

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

concept office and word budget on white page
Creating a personal budget— Probably the first thing that comes to our mind when our finances are mismanaged and largely forgotten. It is quite intimidating to recall where we have spent our money. For setting up a personal budget, you don’t have to be an accountant or a professional bookkeeper to maintain your financial records and track where the money actually went. All that is required is to put your financial expenses into writing for maintaining a healthy life cycle of your paychecks.

Strategic Significance of Creating a Personal Budget

Let’s face it, creating a personal budget is an overwhelming task as it requires a lot of attention and focus to detail. For some, it’s easier not to think about it and spend freely rather than to sit down and pay attention to what you’re doing. As experts say, ‘it’s a lot easier to create a personal budget and much harder to follow it.’

A personal budget helps you plan your income and expenditures wisely. Those who are successful start to gain more control over their financial aspects. It would be wrong to say that our budget defines who we are, whether we are spendthrifts or skinflints. In simplest terms, the budget depends on our spending patterns. Those who are unable to plan and meet their budget cleverly may find themselves in severe agony or stark anguish. So, creating a personal budget is mandatory for those who find themselves stuck in a miserable financial crises.

Why A Personal Budget?

Undoubtedly, creating and maintaining a personal budget may be a painful process, especially for those who are not good at remembering and recording financial transactions. Logically speaking, it isn’t that hard because almost everybody knows where they spend their financial resources. All that one needs to do is record and track transactions for maintaining a healthy flow of operations and activities. No matter how difficult personal budgeting may sound, there are ways in which it can be created, organized, and maintained. 


6 Steps to Creating a Personal Budget

Your Inner Motivations or Behind the Scene Elements

To make smart use of your money, you need to dig deep into your life values such as your social, physical, and financial environment. Intrinsic motivation is derived from social pressures, societal norms, and personal values that push a person to make a personal budget for maintaining a healthy life cycle. However, this only happens when a person builds and maintain a positive mindset throughout the course of the journey. And above all, understanding goals and setting up priorities accumulates to give you more control over your finances and eventually over your life. In short, smart planning and budgeting always help you to make better financial decisions in life.

Determine How Much Money You Can Afford To Spend

This is probably the most crucial step in creating a personal budget. Obviously, you can only spend what you have in your bank account. A smart move is to keep at least 30% in reserve for dealing with an unexpected financial crises or uncertainties. These circumstances can spring up anytime– perhaps if you lose your job, become ill, or there are delays in your monthly paychecks. You can use this reserve to pay off your expenses. Before allocating money for meeting several necessities, you must know exactly how much money you can afford to spend in a single month.

Shop Smarter

By creating a personal budget, you can easily manage your budget and keep track of your finances. Most of us are impulse buyers or have an irrational buying and purchasing pattern. We hardly care about money when it comes to buying our favorite products or services. This is a major hit-back in our finances which disrupts the whole monthly budget. This pattern must be avoided at any cost! For avoiding impulse purchasing, you can make a shopping list and strictly stick with it when shopping. Look for stores that offer competitive prices, buy-in-bulk (only the things that are used a lot), take cash only, give attention to sales promotions, use discount vouchers, and, most importantly, make rational judgments when you are purchasing items.

Record Your Transactions

Every outflow of cash or funds must be recorded, preferably at the moment you make the purchase, either on your phone’s notepad or a Budgeting App. This way, you can consider this transaction when budgeting afterward. By doing this, creating a personal budget and maintaining a track of your transactions will become easier and far more convincing than ever.

Evaluate Monthly Expenses

Keeping a close eye on your monthly spending will allow you to maintain greater control over your budget. At the end of the month, you will notice and fix the discrepancies with reasonable judgment. Moreover, it will allow and help you examine whether or not you are in your budget limit.

Make Adjustments

Making adjustments is as hard as creating a personal budget… at first. This may possibly be the most discouraging element when your personal budget results don’t meet your financial needs and expectations. However, you don’t need to worry about this because, once you get used to following your budget, eventually things will start to land in your way. And, you’ll actually see that you end up with more money in the end.

Conclusion

Staying on top of your personal budget can become intimidating and challenging. For most, it’s a ‘necessary evil’. It doesn’t really matter how well off you are financially, you still need to build and establish a personal budget for making an optimal use of your in-hand resources. Creating a personal budget has become the need of an hour and those who successfully manage their personal finances save a lot of money for more important future establishments.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Household expenses concept. Blue toned background

What Is A Household Budget?

A household or home budget is a finance plan that reveals the snapshot of your monthly income towards expenses, saving, debt repayment. It allows you to keep a close look at your income and help you examine where you can save money or cut extra expenses. Without a home budget, it’s like sailing a ship in an open sea, moving uncontrollably without a direction. In simplest terms, a home budget is a tool used for sustaining a stable lifestyle.

Significance of a Household Budget

Planning and creating a household budget is no easy feat. It requires persistence and dedication as it may take a lot of time, mental efforts and energy. No matter how well off you consider yourself to be, it is absolutely necessary to have a home budget in place in order to keep a track record of monthly spending. No one is born with money management skills, you have to learn the art of this game before you can start building own budget.

According to studies, a home budget works as a magic formula that solves most of your money related problems. This signifies that we can save tons of money by making an effective use of scarce resources we have for the month. Trust me, a household budget solves more than half of the problems in homes! We often find ourselves stuck miserably fighting with our own thoughts about how on earth we are going to meet our demands for the month with a single paycheck. This concern haunts most of the people around the globe and, if you consider yourself to be among those people, you have to learn money management strategies and skills in order to maintain a healthy financial life cycle.

6 Steps to Build a Household Budget

Know Your Income and Set Goals

The first and the most crucial step in creating a budget is knowing the exact influx of your income. Obviously, whatever you earn for the month has to be wisely allocated into several subcategories like food, health, transportation, utility, clothing, home maintenance and other miscellaneous expenses. So, after keeping let’s say 20% as a reserve for hard times, you need to distribute resources per set requirements.

This means that you need to identify what is important to you and draw a clear line between your needs and desires. Moreover, setting smart goals can help you maintain an equilibrium between your income and expenditures for the month which would ultimately increase your savings!

Stick to Your Goals

Your spending should never exceed your household budget! For maintaining a healthy financial life cycle, you need to plan a budget that remains within the allocated amount of money. There is certainly no point in making a budget plan if you don’t expect to support and stick with it later on. Your positive attitude and conviction will allow you to reap rewards and negative ones will lead you to trouble.

Separate Needs and Wants

Once you start to track where your income or finances are going, ,you will be able to discover which things you can afford to buy and which you can afford to postpone. By closely examining the household budget, you will get a clear picture of your monthly spending and will be able to make a separate list of your wants and needs.

Design Your Budget

People have mixed opinions regarding how to design a budget because everyone has their own set of priorities. They also feel deprived when they have to deal with the word ‘budget’ as it evokes feelings of fear, anxiety, stress or frustration. So, before building your own budget for the month, you need to know exactly how much money you can afford to spend in a month.

Make a Clear Execution Strategy

Once you set your priorities, you need to allocate money and decide how much money you can afford to spend for a certain need. Planning plays a critical role in defining the fate of the household budget. The better it is, the greater the rewards. So, once the plan is drafted, you need to put it into action for making an optimal use of resources at your disposal.

Reevaluate the Budget

Any good household budget plan involves monitoring, tracking, periodic review and occasional re-evaluation. If you continue a habit of making effective budget plans, there will come a time when drafting a budget will become easier than you can ever imagine.

Conclusion

A household budget can help you feel more in control of your finances. It will reveal whether or not you are exceeding your budget limits. A careful plan and a smart approach can help you save more money than you can imagine.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Close-up Of A Businessperson's Hand Giving Cheque To Colleague At Workplace
Manage your debt, budget your recreational appetite, pay unescapable bills, credit at least 20% money into your savings account, contribute a tiny portion of income right from the beginning in your retirement or 401k account. 

There is nothing more thrilling and exciting than getting your first paycheck from your first ‘real job’ after school, college or university. Over the course of your first month on the job, you have probably thought of spending your first paycheck in a million different ways already. Well, that’s what everyone does and it’s pretty normal. However, creating a budget or financial plan right from the beginning saves you from financial miseries and crises in the future and allows you to know the worth of your hard-earned money.

Money Management and Millennials

Money management is no easy feat, especially when you are new to managing your money-related tasks. It is a foreign concept to most millennials. According to a survey conducted that included 5500 millennials, only 30% of people credit and contribute money from their first paycheck into their savings and 401k account. By making an analysis from the scale of percentage, the survey indicates that millennials either lack the financial wisdom to save money for hard times or they don’t even believe in saving money at all.

Make A Financial Budget

Trust us. The motivation to save money develops right from the beginning and the little that you do contribute to your savings and retirement accounts each month accumulates to a significant wealth at the end of your working years. Your first paycheck is like a cheery on the top of a pineapple cake. If you eat it before cutting the cake, the charm and excitement level of blowing the candles and cutting the cake will vanish.

This indicates that you must budget every paycheck properly and develop a habit of saving money right from the beginning in order to meet financial emergencies and save yourself from mental traumas relating to money. Monthly budgeting and bookkeeping give you a clear snapshot of your salary and helps you know where your money is actually going.

Here is what you should do with your every paycheck.

Pay Off Debt

You may not know how to manage your money properly, but you have to learn the art of money management or you may find yourself stuck miserably amid severe financial problems. To keep your financial equation balanced, you must always pay off your debt first before allocating and spending money on other things–no matter if it’s your first paycheck or your tenth! The debts like student loan debt, auto loan debt, and credit card debt must be wisely paid off first or high-interest rates can cripple your long-term financial standing which will ultimately make it extremely difficult for you to move ahead in your career. In short, paying off debt should be priority #1 and no one argues that!

Create A Savings Account Or Emergency Fund

Building an emergency fund and creating a savings account is ideal for you to kick-start your saving career. This will help you meet financial emergencies and encourage you to spend less and save more. Since life is horribly unpredictable, you must have a backup plan and resources to meet financial problems that may ascend at any moment. Keep working, save more, hope for the best, and plan for the worst! According to the 50-30-20 rule, you must save at least 20% of your income for hard times. Crediting a fixed portion of your income from every paycheck gets you more financially secured and stable. If you start saving from your first paycheck, it will be a big plus for you in the long run.  

Contribute Money to Your 401k or IRA Account

According to studies, those who regularly contribute money into their retirement fund, 401k, or IRA account, stay happier throughout their lives and spend a relaxing life knowing their future is secured and well protected. In order to accumulate a significant wealth to enjoy your post-working or retirement life, you must start contributing to your retirement account right from your first paycheck.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

 

 

Group of young business people have meeting in office. New plan discussing. Four persons. Intentional lens flares
Setting budgets, saving money, and regularly contributing a tiny portion of income to your retirement account can not just help you meet your financial emergencies but also allows you to secure a safe and healthy post-retirement life. It is true that saving money on a regular-basis is a tough job for most millennials as they lack money-management and budgeting awareness. Creating an ideal budget for the month is not an alien job, all that you need to do is to stick to the devised budget the way you have planned or intended it to be.

Money-related issues can cause you a great deal of stress, especially when you have to support your entire family with many mouths to feed. To stay on top of your budget, you first need to have a well thought out brainstorming session for sorting things out like your monthly income, monthly expenses, anticipated saving benchmark and other similar things. Budgeting doesn’t have to be that hard. It all depends on the motivation level of a person; whether or not they truly want to save money for hard times. Setting your monthly saving targets can help you save a significant portion of your money which could further be invested somewhere useful or help in financial emergencies and difficulties.

Look At the Bigger Picture

For ideal budgeting, you need to learn the art of the game first for staying on top of your cash flow. Millennials who are already exposed to various ways of spending money now need to plan sensibly and make a budget wisely or else, they will never be able to save money at all. It doesn’t matter what tool or technique you consider to use for ideal budgeting, as long as you know the significance of making a budget—you are never in the ruins.

Let’s suppose you are using a budget spreadsheet. You will have a better understanding of your finances and where your money is going each month. Also, you will feel more in control of your finances which will ultimately get you one step closer to meeting your financial goals. According to studies, most millennials face financial traumas early in their professional careers because they fail to manage their finances properly. A lack of money-management skills begins with lack of planning and motivation to save money for meeting financial problems. Those who regularly contribute to their retirement, 401k, or IRA account can enjoy their post-working life more than anyone else because they will have the financial security and safety to make the most out of it.

Create a Budget

Creating a budget plan for the month allows you to live comfortably within your means. You need to precisely know your current financial status and how much you can afford to spend in a month. For that, you need to set both short and long-term goals for creating the right plan for ideal saving and budgeting. This indicates that planning and budget forecasting is critically important for creating a successful budgeting plan. According to research, those who have the habit of saving can have a healthy, more stable, and secure future.

Stick With Your Budget Strategy

Once you have a clear picture of the ins and outs of your cash flow, you need to refine your budget strategy. Tightening and cutting your extra expenses will help you save more which means that sticking with your budgeting strategy and plan is ideal in every sense. First things first, always pay your debt. After that, you need to set your priorities. There are certain unavoidable expenses like utility and household bills which cannot be avoided and that cannot be controlled. However, you can cut back on grocery and shopping bills by limiting your spending habits.

Get Help from a Budgeting Expert

If you are not good at numbers or setting up a proper budget, you can hire the professional services of budgeting experts or planners. From bookkeeping and inspection to planning, they will have the creative vision to provide you a workable monthly budgeting plan.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts
 Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Book and Coin in glass jar on wooden table with pencil. Conceptual saving, invest, for education or future
When you have no idea of where your money goes, your financial situation can become chaotic, making you lose control over your finances. On the other hand, when you are aware of your complete monetary flow, spending, saving habits, and financial goals, you tend to make smart decisions with your money, improving your overall financial health and outlook. You have to create a budget to help you do just that.

‘Budget your money!’ This is the powerful mantra that every money advisor and bookkeeping expert suggests to their clients. In fact, budgeting is the most fundamental and effective tool for managing your finances. It clearly demonstrates your fund allocation patterns and the choices you have on what items to enjoy. It will liberate you from overloading debts and the grief of overspending. Although, creating a budget is verily more work, it pays off immensely with many great life-enhancing advantages.  Here are the reasons why it is essential that you create a personal budget.

Keep your Eye on the Prize

Budgeting helps you map out your long-term financial goals and work towards them. On the contrary, drifting aimlessly through life and spending your money on every shiny, attractive item that simply catches your eye can hardly help you save up enough funds to pay off your debts, buy your dream car, put a down payment on your home, or go on vacation with your family.

When you create a budget, you tend to follow the path leading towards your goals, save money smartly, track your financial progress, and realize your dreams. You won’t feel misery over realizing that the brand new Xbox game does not fit your budget as you are saving up for a new home (or something else) which is another long-lasting attraction.  

Gain Control Over your Finances

Create a budget for yourself if you want to become intentional about your spending and savings. Consequently, budgeting enables you to control your money rather than let it control you. It prevents the sudden hassle of having to adjust to a lack of money which occurs when you initially fail to plan your spending. In addition, budgeting also helps you decide whether you should sacrifice short-term spending, such as purchasing cheaper hair products, in return for a long-term advantage such as a new laptop or car.

Spend Money within your Means

Credit cards are often the leading reason for most consumers who spend money beyond their means and do not most often realize they are overspending until they are drowning in heavy debt. However, when you create a budget and stick to it, you will never see yourself struggling in such a precarious position. In fact, you will know your exact earnings and affordability to spend every month and how much you have to save to realize your money goals.

Stay Focused on your Financial Goals

In the business environment, budgeting and bookkeeping can help avoid spending unnecessarily on products and services that typically do not aid in attaining financial goals. When you are juggling with limited resources, create a budget to easily make ends meet.

Be Prepared for Emergencies

You never know when life will strike you with unexpected events such as getting laid off, becoming sick or injured, a loved one’s death, or getting through a divorce. All of these can result in serious financial disasters. Evidently, such emergencies often seem to arise in the worst possible circumstances when you are already in need for money. That is exactly why you have to build an emergency fund.

Consequently, create a budget that includes an emergency fund consisting of a minimum of four to seven months worth of living costs. This extra fund will tend to save you from drowning into the depths of chronic debt upon a severe life crisis. Certainly, you have to show patience and perseverance to save up such an emergency fund. However, avoid allocating the majority of earnings into your emergency fund. Rather, device it into budgeting with realistic goals and begin small. Simply putting $10-$30 aside weekly will slowly build your emergency fund.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.