How to budget your salary

Posted by James on Friday October 17, 2014 at 15:18:46:

An important skill that everybody will need to develop is the ability to budget his or her income. This is one of the ways you put a check on your expenses with respect to your income and in turn avoiding any misuse and waste of finances. If your expenditure is most of the time more than your salary, a budget is an effective way to help prioritize and cut down the less important. A budget is one way you get to measure your goals and lead a stress free life. This can be quite consuming of your time, but in the end proves to be worth the while.

Evaluating your Expenditures
The first step to take in the process of budgeting is to know what your expenses are. Take the time to make a list of all the things and items that you usually spend your money on and beside each, include the prize. This might take a bit of your time and mental energy a well. Make sure to keep the prices update in case it fluctuates. In this game, accuracy is really important. You do not want to be caught up on an unexpected increase. Write them down no matter how insignificant you think they are. Get the entire list organized and categorized.

Prioritize your expenditures
This is time to bring together all your list of possible and usual expenditures and arrange in order of importance. This way, you will get to attend to the more important things and avoid wasteful expenditures. This is to say that your expenditure should start from the items or projects on the top of the list. You will also get to realize that certain expenditures that you make may not be necessary and can be cut off. You basic needs should always come first on the list.

Miscellaneous Expenses
Nobody likes unexpected emergencies, right? The truth is that they are bound to show up. For this reason, you need to also set aside budget for this unforeseen expenses. This will help you not to get stranded when it does show up.

At the end of your evaluation and prioritization, you need to now balance the budget. This way you can tell if your income matches your expenditures; whether your expenses exceeds your income or vice versa. In a case where your expenditure exceeds, it is advisable that you push some of the items on the list to the next budgeting period – next month. As much as possible, avoid taking a loan and even when you do you, include it in your next budget.

Note here that you do not have to do this all at once. Take your time. You can come up with a plan of doing it weekly. For your financial management to be successful, the key lies in having a budget- this is the foundation. You might not be very good at it at first, but the more you do it the easier it will get. There are a lot of resources in bookstores and even online to help you on how to budget your salary. Don't hesitate to get one if you need help.