Personal budget consists of assets and liabilities, that is, out of disposable income part. Purpose of budget planning procedure is the most rational and effective use of cash receipts, contributing to early achievement of financial goals, getting rid of debts, increasing cash and tangible assets, that is, improving financial condition of a person.
So, how to keep personal budget for a month? Here are 10 steps to compiling personal budget.
Planning of Personal Budget Income
Start to plan personal budget with its revenue side.
Step 1. Record all planned amounts of cash receipts. For example, this includes salary, planned income from any additional work, interest on deposits and other income in personal budget. If you can not accurately determine amount of future income (for example, incomes are not fixed, wages are not fixed, etc.), then calculate average amount of income for the last 6 months and plan it.
Planning of Personal Budget Costs
After income of personal budget is planned, you can proceed to planning of cost part. Cost planning is a more complex process and, at the same time, more important.
Step 2. Plan repayment of all debts (if any). As it was said, repayment of debts should go first. If you do not have any, you can skip this step.
Step 3. Plan how much money you save for formation of reserves, savings and / or capital for investment. These are the following items of importance for personal budget after payment of debts. And it is necessary to plan them at this stage, saving at least 10% of receipts for these purposes.
Step 4. Plan payment for all fixed expenses. Communal payments, Internet, mobile phones, rent, school, kindergarten and all other expenses paid monthly.
Step 5. Plan at least 10% of income for unforeseen expenses. It is recommended to plan this expense item at this stage. Then, by the end of the month, if this money is not needed, add them to reserve fund, to savings or to increase in capital. You can also use them to make a purchase, only really necessary.
If by this time (or even earlier) you have run out of money for distribution, this means that you urgently need to think about increasing your income! It does not work out in other way, otherwise you will continue to slide deeper into financial hole. However if there no way to earn additional money at the time, you can use a payday loan for quick salvation of financial problems. But be sure to take money from reliable services. Visit paydayloansonline.reviews to read about trusted companies and scammers in the Internet and make the right choice.
Step 6. Schedule food expenses, split them in equal parts, for example, for each week. Distribute here as much as necessary, based on your financial condition, trying not to exaggerate and not to belittle amounts. On food, it is desirable to spend no more than 30% of personal budget income.
Step 7. Plan transportation costs. Allocate here amount that you spend at average per day on public transport or gasoline if you have your own car.
Step 8. Plan important purchases. What you need to buy this month, without which you can not do. For example, buying clothes, small household appliances, etc.
Step 9. Plan necessary purchases from category of «small things». This includes household chemical goods, hygiene products, cosmetics, etc.
If by this time you still have money for distribution and at the same time no debts, your financial condition is above poverty line! If you still have funds, but there are debts, spend the entire balance for early repayment of debts.
Step 10. Plan cost of entertainment. Only on this, the last stage, and not on the first, on the day of salary, as many like to do it. In any case, there is no need to abuse spending here, but a certain, small part of personal budget can be spent, if only your financial status allows it! And it is possible in case that you have reached this step.
Your personal budget is made up. Now it is necessary to adhere to the plan, to fix all, already actual, receipts and expenses, keeping records of personal finance, and after the planned period to analyze how well you fulfilled your plan. The main criterion for success will be overfulfilment of revenue side of personal budget, and saving of current expenditures.
These 10 steps can be adjusted to suit your own characteristics, only it is not recommended to change priorities of importance in distribution of costs.