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If you're using a hard time with debt then creating a budget can be a real help. However, it is important that you simply create a budget the right way. Many people result in the mistake of sitting down, calculating all their expenses and then attempting to reduce them by a few arbitrary percentage such 10%, 20% or whatever. But that is simply not right.
Were you should start
The right starting point in creating a budget is by defining your short- and long-term goals. Your short-terms goals ought to be ones you will probably accomplish each year approximately. For instance, if you're having a trouble with debt, your very best short-term goal may be to get rid of it.. The thing is to pick a goal you will probably achieve where each month you're making progress towards that goal.
Next, define your long-term goal or goals. This may be to buy a home, send your kids through college and have a good retirement.
Now that you know
Now you understand what your goals are, you'll know just how much you will need to save each month - and may start developing a budget which get you there. With regard to an example, suppose you need to save $200 a month towards your goal to get out of debt and the other $100 for a long-term objective of investing for retirement.
Track all of your spending
The next step is to track all of your spending not less than 30 days. You can do this the old-fashioned way having a pencil and a notepad or you have a smart phone, there are a number of expense tracking and budgeting apps available. Two of the most widely used are Mint (mint.com) and You Require a Budget. I suggest one of the budgeting apps because it will take much of the work of creating and sticking with a budget off your shoulders. For instance, many of them will automatically divide your spending in to the appropriate categories - food, entertainment, transportation, insurance, medical expenses and so on.
When you are able see where your hard earned money is going
When you are able see where your money's going, next comes the dicey part. You have to next figure out where one can make the cuts required to get the spending down enough below your income that you'll be in a position to save for the goals. Returning to our example, in case your goals require you that you simply save $300 a month, you will have to cut your spending to at least $300 below your income.
The reduced hanging fruit
Should you and your family are typical, there's some low hanging fruit or places that you should be able to reduce your spending pretty substantially. First and foremost among these is food. This is an area where after some effort, you should be able to cut your costs by a number of hundred dollars a month. You can do this with a combination of shopping smart by using coupons and store specials. Second, you might find you could easily save another $100 per month by reducing the number you spend on entertainment. Sitting in your own home, eating a pizza and watching a rented movie might not be as much fun as dining out after which seeing a theater but it is definitely a great deal cheaper.
Put all your spending within microscope
After you go through those areas where it's easy to make cuts, you will need to put the remainder of your spending under a microscope. Here's a good example that might sound silly but of you just forego that drive-through mug of coffee every morning, you could lay aside nearly $37 a month or $444 annually. Add this as to the you're saving on groceries and entertainment and you should be well moving toward eliminating debt.