Create And Maintain A Budget - Finance 101
By William R. Nabaza of http://www.nabaza.com/ecommerce.htm, Mon Jan 2nd

The first step to avoiding the troubles of financial debt is tocreate and maintain a budget. Itís not as intimidating as itsounds, donít worry.

First off, create a list of all your monthly income and also alist of your monthly expenses. When determining income, list allsources including alimony, child support, side jobs, etc. Incalculating expenses, be sure to include housing, food,transportation, utilities, entertainment, etc. To gain anaccurate reflection of actual expenses, sit down each night andwrite down expenses, just make sure to save receipts. Determineif your income covers all of your expenses. If the answer is no,then some expenses need to be reduced.

Adjust expenses. If it is a small discrepancy, it may meanreducing some minor expenses like entertainment or cell phoneplan. If the deficit is larger, you may need to downsize yourvehicle or living arrangements. If your income covers all ofyour expenses, you still may want to trim some of the excess fatoff your spending habits. This can free up extra money forthings such as vacations or college funds for your children.

Additionally, consider if you need to add new categories. Someareas that are often overlooked are debt reduction, emergencysavings funds, and retirement savings. An emergency fund ensuresthere is an adequate amount available to cover unforeseen events(car emergency, etc), should it arise. This will eliminate theneed for using credit which can quickly damage your budget.

There are several advantages to sticking to your budget.Firstly, most people have set financial goals that they wouldlike to reach in the future. Sometimes it may be a trip, a brandnew car, or a college education. A budget can help people savemoney to make these goals a reality. Additionally, many peopleare crushed under heavy consumer debt. Without a disciplinedpattern of spending, it is virtually impossible to make muchheadway in reducing debt. A personal budget will provide thenecessary framework to begin eliminating these inflated accountbalances.

If executed properly, a budget will allow a person tosimultaneously meet their expenses, place money into savings,and pay back outstanding debts. Therefore, it is anyoneís bestinterest to create and implement a budget.

Cut Back on Spending

At first it may seem difficult to limit spending and stick to abudget, however there are a few practical changes that you canmake everyday that will cut your spending more than you expect.

Firstly, alter credit car behavior. Start to pay cash wheneverpossible. This will help you avoid making a purchase unless youactually have the money available. If you decide to make acredit card purchase, be prepared to pay the balance offmonthly. This will save a lot of money through avoiding interestcharges. If you already have a credit card balance, thentransfer to a card with a low interest rate. Also, find a cardthat does not charge an annual fee.

Another tip is to pack your lunch everyday. All of those lunchhours spent at restaurants will add up. Bringing your own lunchcan save you several dollars every day, which will add up overtime.

Use your cell phone during off peak hours. Some people willspend a couple hundred dollars a month on phone charges. Avoidthis by making most calls during off peak times. Check with yourservice and plan to find out when you have cheaper or unlimitedcalls.

Stop throwing away the Sunday newspaper before skimming throughthe advertisements. Clip some of those coupons and check out thesales. This may seem tedious, but the savings are often worthit. Many stores will double or triple the amount of the coupon.This technique can save you up to 20 or 30 dollars each time youhead to the food store.

Additionally, refinance. Mortgage rates have been extremely lowover the past year. This has been a great opportunity to reducethe monthly house payment significantly. If you are planning tohave your house paid off prior to retirement, then you may wantto factor this in before refinancing.

Finally, bundle your insurance. Many insurance companies willoffer their customers lower rates if they purchase multiplepolicies. For instance, some people use the same agent formultiple cars, and others combine their cars and house. Alwayskeep in mind that a dollar here and there really begins to addup. Avoid the temptation of thinking that changing your spendinghabits wouldnít save that much money.

Start Saving! So you are loaded down with bills to pay eachmonth and are wondering how you can begin a savings account foremergencies and other high-expense endeavors. In other words,where can you find that extra cash to put away for later?Firstly, when configuring your budge, plan for your savingsfirst. You will grow richer each month if you begin to payyourself first. Before paying any bills, decide on a set amountthat you will pay yourself firstómaybe five or ten percentóorwhatever you decideóof your paycheck. Then, deposit the amountinto a savings account before paying any bills. When you do thisat the beginning of the month, your entire paycheck will notsuddenly slip through your fingers. If you wait until the end ofthe month, there may be nothing left to save. Paying yourselffirst will give you a systematic way to make your money grow.Regardless of your profession or your income, this system willwork if you stick to it. Another technique you may

try forsaving money is to empty your extra change into a coffee can ora jar each day. At the end of the month, roll the coins and putthem into your savings account. You may be able to save 30 or 40dollars each month just with your spare change. Remember thatgood money management is more than just a mathematical formula.Itís too closely tied with the ups and downs of living to bejust that. Your money management plan is always subject tochange if your life situation changes. The object of a goodbudget is to make your money go the farthest in helping youreach your goals, it is not there to force to you to abide byrules. Donít get discouraged if the budget plan doesnít workperfectly right away. It may involve some revising and editinguntil it fits your needs. Then, make sure to review it often,and be sure it is making the best use of every penny! Because weknow how helpful those spare pennies can be!

Avoid Spending Pitfalls! With all the advantages that areevident from personal budgeting, it is no wonder that more andmore people are relying on them to reduce debts and increasetheir savings. However, all ëbudgetersí need to be careful toavoid some common pitfalls that appear often.

Credit cards may seem like small pieces of plastic, however theycan cause a great deal of trouble for the owners. It is commonfor people to make unwise purchases, which they would haveavoided otherwise, because they had the credit card in theirwallet. The best solution for many people is simply to get ridof credit cards and begin paying only by cash, check, or debitcards. You may want to keep one card handy for emergencies, butit is probably best to keep it out of reach, and far away fromyour wallet.

Another problem with budgeting is impatience. There arefinancial goals set, but people do not have the patience tocomplete a savings program. For instance, an individual beginssetting aside money for a new car; however, after a few monthsthey discover the car of their dreams. Rather than waiting, theymake the purchase. This could pose some serious financialstrains. Discipline is a must to prevent impatience frombreaking your budget.

Once a person makes a budget, they often fail to adjust it whennecessary. A budget is created using a set of expenses andincome figures that are liable to change. As these figures dochange, it is important that the budget changes to reflect theadjustments. There could be some major deficits if this is notdone appropriately and promptly. Of course nobody forgets aboutChristmas or Hanukkah, however many people do not considerbudgeting for holidays when creating a budget. Therefore,adequate funds have not been set aside for presents, food,parties, etc. These items should be factored in and saved forthroughout the year. Finally, many people factor intransportation and accommodations for vacations in their budget,however they underestimate money needed for food, entertainment,and spending money. Keep in mind that all the resorts andtourists areas are double or triple what you would normally pay.With a little planning, youíll be on your way to saving moremoney than you ever thought possible!

Easy Money-Saving Changes One of the most obvious and easy waysto save some extra cash is to change some of the way you useproducts and items in your everyday life. The key is to makeminor changes. For instance, always buy the cheapest hand soapyou can find. The quality doesnít necessarily go up with theprice and you can use it in place of ëbath soap.í Always use thewhole product. Turn bottles upside down and drain to get thelast bit from them. Tear open sugar and flour sacks to geteverything; squeeze or cut open tubes to use it all beforerunning out to buy more. Youíll be surprised at how much therereally is left!

Also, never use more than you need. Just because it says on thebox that you need a full cup, doesnít mean that you really do itneed it. Half a measure of laundry detergent and a half teaspoonof dish soap are examples of what are usually enough, ratherthan what the manufacturer says.

To save some cash, you can use some of the things in your housein some unique ways. Instead of spending lots of money on thefancy floor cleaners, try using ammonia. It does a great job,and you can use plain water in between times. If your furnitureneeds some polishing, mix equal parts of white vinegar andvegetable oil and rub on the furniture. Buff with a cloth untilit shines.

For a freezer bag, use empty chip bags and close with maskingtaps. Also try a bowl with a lid, such as a margarine tub.

If your skin is feeling a little dry, there are severalsubstitutes for expensive lotion. Petroleum jelly rubbed intoyour hands at night after a warm water soak, mayonnaise (rinsew/ cold water after), or any other oil based food. Just be sureto put it on immediately after your hands have been in water.

To save some money on laundry, dissolve a bar of handsoap inwater to replace laundry detergent. Add three gallons of hotwater, mix thoroughly and add a cup of washing soda.

Sure, these are small changes, but added up, they can put someextra change into your pocket throughout the year!

About the author:William Nabaza of http://www.Nabaza.com specializes in domains,webhosting, webmaster's tools, netpreneur's articles andresources. Stands out as a freebie provider, businessopportunity provider and the like. Visit his site athttp://www.nabaza.com or contact him directly atwilliam@nabaza.com more free articles here:http://www.nabaza.com/ecommerce.htm