How to Make a Budget
Many consider budgets like diets: they never work and in the end you are worse off than when you started. However, if a budget is formulated and implemented properly then it works well.
The better and smarter way to create a budget is first to track your expenses and then make a budget. This practice would insure that your budget is reasonable and attainable. So first off, you need to track your expenses.
There are various ways to track your expenses. But the most promising and useful ones are to:
- Utilize different computer softwares.
- Use a day planner.
- Keep all receipts.
Budgets don’t work most of the time because people spend too much on wants rather than needs. As you all know, a need is crucial for human survival while a want is considered to be a luxury. The best way to determine if a need is a want is to ask yourself this question: “How did I live without this product or service before?”
There are various budget guidelines, which demonstrably justify how much you should spend and on what. Sample budget guideline is:
- Housing: 30% - 40%
- Utilities: 7% - 14%
- Food: 10% - 20%
- Transportation: 15%-26%
- Medical: 10%-15%
- Clothing: 2%-5%
- Savings: 5%-10%
Finally, now when you have tracked your spending behavior for a period of time you are ready to develop a budget!