Create a realistic budget and become a better person
Let’s be honest, the thought of creating a budget is depressing enough to make you give up the whole thing as a bad joke and just carry on like before. So what if you scraped through the last year by the skin of your teeth, you still made it right? Wrong! Living like that is not healthy!
Most people dread the sheer idea of creating a budget as if it was some horrible monster lurking in the shadows. It is not! Actually, once you get one done and get used to the idea of using it, it may be fun. Really! An the best thing is, your self confidence gets a real boost and you simply feel a lot better. Here are a few ideas that let me transformed my life and if you want to dig deeper.
Keep it simple
Don’t try to be fancy about HOW your budget is created. If you have nothing more than a pencil and a piece of paper then that’s what you use.
Start with your income, but be realistic. Have a look at your income from the previous year. Add up everything you earned and divide by 12. An amount somewhere between this average and your lowest earnings is about right for a budget.
Next, list your expenses
Try to stick to general categories as this will allow your budget to be more flexible. I like to use the following categories as they tend to cover everything I might spend money on in the month.
Paying off debt
This is a high priority, if you can pay off all your interest based repayments then that burden is removed and money is freed up to be used elsewhere.
The obvious ones here are rent or mortgage, insurance and property taxes. The less obvious ones are maintenance related and include things like a gardening service and even plumbers.
These are all your monthly bills for water, electricity, gas, phone, internet, cable and may not always be fixed amounts. Again it would be a good idea to have a look at your bills from the previous year.
This may be for your own car and will include car payments, gas, insurance, repairs, registration, inspection, tires. Or it may be what you spend on train tickets, bus fares and lift pools.
This one is a little trickier, how often do you go to the doctor, are you on any chronic medication, do you have a medical aid and so forth?
Groceries and dining fall under this category but are actually separate because the one is a necessity and the other is a luxury. Allow for the occasional takeout or restaurant though because there are days when you won’t want to cook.
This is everything that is for a specific person such as clothing, haircuts, gifts and entertainment. Remember that depending on how old your kids are they will be outgrowing everything they own in a matter of months, so their clothing counts as an essential
One-time or big expenses
This could be anything from something especially nice for yourself, to an unforeseen emergency. Things happen and life intervenes, don’t let your whole budget fall apart because you get caught unawares.
So there you go. This may look complicated at first but believe me, it’s not. What it can do, though, is transform your life and get you heading into a completely new, much better direction in your life.