In this busy schedule, people like you and me really don’t have the time to remember where our monthly income goes! And we ask ourselves ‘why I am not able to save some bucks from my monthly income?’ Certainly, there are many household and other expenses which are to be borne in order to live life comfortably. But sometimes we do spend some extra bucks and there lies the pitfalls of our monthly spending. Therefore you have to set up a personal budget that fits your needs. A personal budget is nothing but a straight reporting list of expenses and earnings. However, you should consider the following steps while creating your personal budget.

Select a correct method:You have two options to track your monthly income and expenses. Either you can use software programs like the personal budget management software or pencil and paper method. If you are not comfortable with computer softwares then using pencil and paper is your ultimate option. Btw, for your convenience there are ready-made personal budget books available in your local market. You just need to bring them and start adding data. Thats all.

There are several personal budget management softwares available in the market. Don’t worry, it will be containing a guide to assist you throughout the program. But remember to take back-up copy at the end of the day because it has been found that if computer system fails, you may loose all your data.

Find out your total income:In personal budgeting, this is quite a simple step. You just need to accumulate and add-up your total income. But be careful, if you are paid on an hourly basis, then you should calculate the amount for a regular month excluding overtime. Adding overtime with the amount could invite some hassles. Therefore overtime and bonus should be written as extra income. Btw if your salary gets a hike, then you can always adjust this total in your regular income.

Keep track your expenses:You can categorize your expenses in 2 categories: Fixed and variable expenses. Generally fixed expenses do not change from month to month. Therefore you can write down payment on rent, auto loans, insurance and mortgage in fixed expenses column.

And you can include the following expenses like food, utilities, medical and credit cards in variable expenses as these expenses often vary from month to month.

And what about pocket money for entertainment and refreshment? Yes, for this you can create a category named discretionary expenses. There you can add all those expenses that are not important for your existence but would always be there.

Figure out the pitfalls:You need to tally your income with your expenses. The figure that you achieve in excess would be there every month. This money can be set aside in order to be saved or to be spent on entertainment, the choice is yours.

Fix a target: By now you have the result in your hand; if your income is excess then you must be getting some dollars in your hand. You can invest those saved amount for betterment of your life. But if your expenses are higher than your income, then you are in trouble. You have to cut down some part of your expense and save it for paying off the dues as soon as possible, so that you can save some dollars from your income.

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