A budget is very important, especially when you want to check your spending. It helps you avoid waste, thereby leaving you with more to spend. Many times, we find ourselves creating a budget and running out of that budget, because, well, who does not love shopping? But we have to pay for our binge spending later with being broke or close to broke. Therefore, before you prepare a budget, there are some things you should know. Here are some of them:
Calculate all your income sources
Gather all your guaranteed income that you receive every month and add them up. You should not include salaries and wages that are in doubt. This will give you a very clear idea of the amount you earn every month. In addition, make efforts to diversify your income.
Keep track of your monthly expenses
Make a list of your recurrent expenditure and add them up to make sure the money coming in exceeds what’s is going out monthly.
Look for items to cut out
If your expenses are more than your income, you should look for a way to cut out some items. This may be a difficult decision but you have to cut your coat according to your size.
Budget for the unexpected
There are some things that we experience that is beyond our control. These things may be critical and you have no choice than to address them. Certainly, you need money to deal with these eventualities.
Don’t overlook the little things
Many people preparing a budget tend to overlook the little things because they are not expensive or important. These things include ATM charges and money for call cards among other expenses. You should look for a way to accommodate them in your budget or get rid of them.
Determine a reasonable amount to save
The amount you will save depends largely on your income. No matter how small it is you should decide an amount to save. It may be as small as 1 or 2% of your total income.