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How To Get Started On Budgeting

Budgeting is very important. It's not only something crucial for small businesses or freelancers, it's also important for everybody, just like you and me.

One thing youíll want to do before you setting up a budget is to stop excessive spending. In fact, without this step, it wonít matter what income you have, youíll never have enough to pay your bills and start saving for your future. Your spending habits will keep this from happening.

Purchase a small notebook you can keep with you. Write down everything you spend for two weeks. This means paying bills, money spent in vending machines, groceries, and every other purchase. If there are other people in your family, ask them to keep their receipts for each purchase and give them to you at the end of the day. This exercise will allow you to see where your money is going.

Next, determine your income. How much does each adult bring home after taxes? Does a teenager contribute to the family finances in any way? Do you have someone living with you and paying rent? Does anyone receive SSI, disability, or payments of another kind? Add up all the income for each person contributing and then youíll know what you have coming in each month.

You may want to consider having your pay direct deposited. This option, offered by many companies around the country, allows you to receive your pay without having to wait for a physical check. It is also deposited into your chosen account so you have access to it without having to run to the bank, wait in line, or possibly miss depositing your check entirely.

Make a list of everything you spend money on each month. This would include savings, housing (rent or mortgage), insurance (homeowners, rental, and automobile), utilities (electric, water, gas and home phone), creditors (major credit card companies as well as department or specialty stores), and groceries. Donít forget about internet, entertainment (satellite or cable television), property taxes, automobile upkeep (gasoline and maintenance), charitable giving, and family gifts throughout the year.

There are a number of websites available online which provide blank budget forms for people to download. You may want to find one or more of these to use as a guideline. Some also provide expected percentages for each category of spending such as allowing 28% of your total income for housing. The more information you can fill in on these forms, the better able youíll be to create a budget that works for your family.

Begin by adding together your total income and placing that on one line of the pre-created budget or write it on a sheet of paper. Next add all of the expenses from the various categories requiring payments. Subtract your expenses from the income and look at the result. If you have money left over, thatís great! You can use some of that money to add to savings or pay down credit card debt. The problem comes when there are more expenses than there is money to cover them. This is when you realize thereís a problem and itís time to get it under control before itís too late.