Secrets of Personal Budget Management

Managing a personal budget isn’t easy as there are just so many tantalizing items out there that have to be bought right away. Of course, this is not the case and most things that people buy don’t have to be bought. It can be hard to control these urges, but through a personal budget, as well as the proper management of it, then pennies can be saved and a significant amount of money can be put away for a rainy day. Budget management is a great problem for many people and it even worth being written about in some custom essay or research paper.

Budget Management

Actually Creating a Budget

The problem that many people encounter when trying to curb their wasteful spending is that they don’t have a budget to begin with. Arrogance when it comes to making a budget often stands in the way of it as people tend to believe that they can handle everything themselves without any problems. Once it goes wrong that’s when people start to make budgets. Start early and stay clear of the problems.

Begin by looking at exactly what’s coming in on a monthly basis. It’s unwise to use the yearly figures as these can change and throw any budget out of its correct orientation. Once the amount that’s coming into a household every month has been found then look at the amount that’s going out. On a side note, remember to take into account any tax or insurance contributions.

Personal Budget Management

The hardest part is figuring out every single expense out there. Start with the easy ones. Look at the bills that go out every month. Grab the latest statement for a mobile phone contract, electric, gas, water, and the Internet. Add all of these up and that can form the initial outgoings.

When it comes to the food bill a rough estimate is usually required as not everybody purchases the same things every week. Take the latest receipt and add a little extra on to it to cover for those treats and other rare culinary delights.

Whatever is left over is what people have to play with every month before they start going into debt.

Savings

Everybody needs some cash reserves to cover any emergencies. Anybody in any job could lose everything in the space of 24 hours. Failure to have any savings is going to mean that poverty, and even starvation, becomes a very real possibility.

The best way to handle this is to pay out roughly 5-10% of each month’s salary to a savings account. In fact, it’s often better to deduct this prior to paying any bills because if any minor hardship commences then it will be the savings fund that doesn’t make it to the bank. If it’s deducted and deposited before anything can be spent then this money is guaranteed every month.

Investments

Spending money is the key to making money. Higher risks will yield greater rewards, and that’s why investing should be a part of anybody’s personal budget management. Cut down on the disposable income and put the money into something. For some people it can be as risky as the stock market and for others it can be as simple as spread betting for minor gains. The choice is really up to the individual and what they feel comfortable with.

Insurance Review

It’s amazing just how many people spend too much on insurance. There are always risks, but it’s all about taking calculated risks to make money. The fact of the matter is that if all the headlines are to be believed then going without any of the insurance policies in existence would be essentially preparing for disaster. Take a look at the amount of money that’s been spent on insurance and cut the policies that are not directly relevant. Having cover for a flood in an area that hasn’t had a flood in over a century is not a good idea. Cut it out and invest the money elsewhere.

Pay Cash

For those irregular expenses keep a suitable amount of cash in a wallet. It’s a well-known fact that people are less inclined to part with their cash than they are to simply swipe a credit card through a machine. Utilising symbolism in this way is a devastating way to stamp down on those impulse expenses that work to ruin any good budget.


How to Live an Efficient Budget

“Twenty dollars earned, nineteen dollars spent – result happiness. Twenty dollars earned, twenty-one dollars spent- result misery.” Being good with money isn’t about how much you make—it’s about how you manage and plan.

Whether you recently drained your savings accounts during a financial crisis or you are just getting started with savings, use these tips to build or rebuild them. The secret to increasing your savings — whether it’s earmarked for your emergency fund or another savings account — is to pay yourself first.  Put the money into a designated savings account before you pay anything else. Rather than trying to save the money that remains at the end of the month, put it away first—before it gets eaten up by other expenses or you’re tempted to spend it.

How to Live an Efficient Budget

Whether you need to update your insurance, revamp your budget or scale back some shopping habits, take some time to consider these ways to have an improved budget.

  1. Decide on your goals and create an expenditure plan– For some people, there’s nothing more appealing than saving for a three-bedroom house with a white picket fence. Others dream of taking a trip around the world or a sabbatical from work. Choosing your money goals makes it easier to work toward them. Once your goals are decided, you need to create an expenditure plan. Most people spend about two-thirds of their income on three essentials: food, housing and transportation. Then there are debt payments, savings, household costs and optional items such as entertainment to consider. Create an annual budget by allocating spending goals for each category.
  2. Don’t settle with the price that’s written– Prices are often a lot more negotiable than you think, even in big-box department stores. If you’ve seen a lower price listed elsewhere, don’t hesitate to ask the store clerk if they can match it. The worst-case scenario is they’ll say “no.”
  3. Don’t rely upon just one source of income- The lack of job security in today’s market means anyone could lose their job or face a salary cut. To create a second source of income, consider turning to one of the fast-growing online marketplaces, such as Fiverr or Etsy.
  4. Maintain your additional income- Earning money outside of a full-time job can complicate matters at tax time; be sure to keep a careful record of all income earned, as well as copies of receipts related to expenses. When it comes to writing off the home office as a tax deduction, be sure to study the IRS rules, which specify that the space can’t be used for other purposes.
  5. Get rid off debts- Credit cards have among the highest interest rates around, averaging approximately 15 percent. Retail credit cards are even higher, with the average APR at 23 percent, according to CreditCards.com. Paying off credit cards as soon as possible can help reduce fees and interest-rate charges that balloon over time.
  6. Record your credit histories- Lenders base their decisions on whether or not to loan consumer’s money, and at what rate, partially on their credit histories. That means someone with a limited credit history (because they have few or no financial accounts) can have trouble taking on a mortgage. Pay bills on time, and be sure to have some accounts in your name.
  7. Calculate your retirement number- Retirement calculators, which are readily available online, make it easy to estimate how much money you should save before retirement. Since $1 million would provide around $50,000 worth of income over 20 years, you probably want to aim for more than that, depending on your lifestyle costs. Look for what you’d receive after years.
  8. Follow the risk-vs-reward-rule- Along with the importance of diversity, the risk-versus-reward trade off is one of the classic rules of investing: If you want higher rewards, you have to take on greater risk. Assess your risk profile and invest accordingly. If you like to know your money is safe, you probably want to keep it in more conservative investments
  9. Emergency Fund- Open a separate bank or savings account if you don’t already have one and name it “emergency fund”. If you find an account that earns interest, that’s even better.
  10. Golden rules for improved budget- Cut spending painless. Save for emergencies. Reduce high cost debt. Take free money and save it.

Finding a way to start saving money so that unexpected expenses aren’t so devastating may not be easy. But shifting your thought patterns can yield long-term results.

“Being a ‘saver’ as opposed to a ‘spender’ is a mindset that may not be natural to most people,” says Aries Jimenez, financial life planner for San Diego Wealth Management. “However, it can be developed through practice.”

The Psychology of Budgeting – A Few Tricks to Help You Save

We all know saving money can be difficult. There are just too many temptations out there and whenever you hit the shops to buy things you actually need, there’s always something else jumping out at you, begging you to buy, buy, buy. You may think a trip to Primark is harmless enough, but before you know it you’ve been sucked in by the super-cheap prices and forked out £30 for stuff you don’t really need.

The thing is, saving is all about motivating yourself and using your willpower to reach certain targets. I find the best way to do this is to set myself incentives. If I save a certain amount of money by a certain date I can give myself a little treat. Not something expensive obviously – that defeats the whole point of saving – but just something I really want or am looking forward to.

The Psychology of Budgeting

Another great way of putting money away is to get a money jar. Whenever you’ve got silver coins in your purse or pocket, take them out and put them in the jar. You won’t miss a few 50ps each week and before you know it, you’ll have a stash of coins ready to cash. Admittedly this is a slow process, but it’s so rewarding at the end.

If I’m getting a bit disheartened with my savings efforts I start making a list of everything I spend my money on. Do it for about a fortnight and write down all your purchases. You’ll soon notice how much you waste on things you don’t really need and this’ll make you more determined not to just throw money away. I always get really annoyed when I can’t buy something I really want because I’ve frittered away my cash.

A lot of you probably struggle because you decide to save money without setting yourself any clear goals. This means it’s all too easy to convince yourself you’ve done well when really, you’re only £50 better off. Instead, set yourself a specific goal like paying off your credit card bill. That way you’ve got more of an incentive to save a certain amount and you’ll feel much more motivated. Plus, if the end of the month comes and you can’t pay off the bill you’ll feel pretty bad about your efforts – not what you want.

Finally, don’t go to the shops when you’re feeling down. Dieters will know one of the hardest times to stay away from the chocolate is when you feel a bit low and it’s the same with shopping. Buying things gives most people an emotional boost so stay well clear!