Posted with permission from Making A Personal Budget

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A Guide on Making a Personal Budget


Couple working out budget

Do you have a weekly, monthly, or yearly personal budget? One of the reasons that we overspend in our day-to-day lives, is that we don't create (and then stick to) a personal budget. The process is easier than you might think, and can help you to stay in the black. Here are some tips to make the creation of your personal budget smoother:

  1. Distinguish your fixed and variable items

Fixed items include expenses such as rent or mortgage payments, and car or health insurance. Meanwhile, variable items include expenses such as grocery or restaurant bills. To calculate the cost for variable items, save your receipts for a month and then estimate approximately how much you spend monthly for those items. While this process isn't an exact science, it will help you to create a budget that's as close as possible to your spending habits.


  1. Set aside cash for certain expenses in your budget

This is one of the best ways to ensure that you don't spend beyond your monthly means. After being paid, place amounts for fixed and variable expenses, inside individual envelopes. This is a tactile method for ensuring that the money you've budgeted for certain expenses will indeed be spent on those items. To ensure that you won't "cheat," seal the envelops to avoid the temptation.


Save your money

  1. Reduce or eliminate unnecessary expenses

This doesn't mean that you have to deprive yourself of any luxuries. However, if you want your personal budget to be tight as a drum, then reduce or eliminate all expenses that aren't really "necessary." For instance, you could buy a 24-pack of sodas, instead of buying them in pricey vending machines. You could also reduce how many sodas you drink daily, or stop drinking them completely! All of these actions can help to trim your budget.


  1. Avoid impulse purchases

This is one of the biggest threats to your personal budget. Too often we find ourselves tempted to buy something on-the-spot, which we haven't included in our personal budget. While it's OK to make some purchases that aren't included in our budget, it's a huge mistake to make those purchases without contemplating whether it's a wise purchase. So instead of making impulse purchases, take the time to determine if you can squeeze the item into your budget. If you can't, then you should definitely avoid making the purchase.


money tree

  1. Buy goods and services using cash whenever possible

While sometimes it's impossible to make purchases using cash, do it whenever possible. Using credit cards is one of the fastest ways to dig yourself a hole of debt. By failing to pay your balance in full, you can easily end up spending three times the cost of a good or service after the interest has accumulated month after month. But by spending in cash, it's much easier to stick to your budget.


Creating a personal budget (and then sticking to it), is definitely one of the most effective ways to stay in the black. Follow these tips to keep your budget personal and practical.



Article Source: A Guide on Making a Personal Budget