Home Organization Tips

Learning how to create a budget is the first step towards fiscal responsibility. Whether you’re saving for your child’s braces, the trip you’ve always wanted to take or a piece of jewelry, knowing how much money you have- and how much you need to live- is critical. I recently took a finance course designed for women to develop the financial know-how necessary to manage their finances responsibly. Creating a budget was the first topic of the course, and I’d like to share this lesson with you- no payment necessary.

The purpose of a budget is to make sure that your expenses are below your income. In this way, you will have enough money for your daily, weekly and monthly needs and hopefully enough left to save a bit in case of an emergency.

When you create a budget, the first step is to list all of your expenses by name and $ amount, ideally in a sheet with two side-by side columns. Here is a list of some standard household expenses:

Next to each category, write down how much you spend on each of these items. Add up the total, and voila! You now know how much your general expenses are. Compare that to your salary (and possibly other sources of income- investments, gifts, etc.) and you’ll know whether your finances are balanced or whether it might be worthwhile to cut back. If you need to cut back, consider cutting back from the ‘extras’ like entertainment, hobbies or fast food. Rent a movie instead of going to the theater. Order in (or better yet, cook your own food) instead of going out, and save on hiring a babysitter and paying the tip you’d pay in a restaurant. Cutting back in these ways, even for a short time, can help you start on the path to savings. And you’ll be happy when you have the money you need for an emergency.

Posted on December 23rd, 2007 by Sari
Filed under: Household Management