Tips For A Beginner Personal Budget

personal budget

Begin Your Personal Budget.

Establishing and keeping a personal budget is one of the first steps to financial freedom. Whether you already are working with a form of a budget or you have yet to establish your first written budget, this information will be helpful to you. Today we look at the basic parts of a good budget to get you on the right path, or help you make the course adjustment that you need on your way to a bright financial future!

Personal Budget

Know How Much You Have

If you have savings, checking accounts, investment accounts, or any other financial instruments, you will want to know how much money is in each account as well as the interest rates and expenses of each one. Make note of this information as it will become important in determining your net worth and the best use of your capital in the future.

Know How Much You Make

For some people, this is easier than others. Those on a salaried pay scale can easily find their monthly income. For hourly employees or those who work in a business where income may rise and fall unpredictably, this can be much more difficult. The most important consideration, regardless of how you earn your monthly income, is to determine the average monthly amount of income that you receive.

Know What You Owe

Determining your monthly recurring debt payments should be your next step. This should be fairly simple to do, as long as you have stopped incurring additional debt in the short term. If you haven’t been able to break your dependence on credit cards, that’s okay, as building a budget will act as a first step for your next financial priority which should be getting out of high interest consumer debt. To find out what your monthly recurring debt payments are, calculate the total amount owed on each debt account as well as the minimum monthly payment.

Determine Your Net Worth

Once you know how much money you have and how much you owe, you can easily determine your net worth. Just subtract what you owe from what you have, and you will derive a number. This number will tell you the value of your financial resources. For me, this number was an eye opener. When I built my first budget, I had a negative net worth. I assume this is fairly common in America, especially for young people just starting out.
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Understand and Take Charge of Your Monthly Expense

Now you know what you have and what you owe when it comes to debt. The next step in your personal budget is knowing what your real monthly expenses are so that you can make good choices that help you do all that you want to do in your life and keep more of what you earn. Below is a good guideline for understanding and getting handle your monthly expenses.


For your monthly budget to work, your expense projections need to be as accurate as possible. Some expenses, like your rent, car payment, and insurance bill, are simple. From there, it gets trickier.

Chances are your utility bills fluctuate from month to month and how much you spend on groceries, dining out, and clothing may vary drastically. Here’s where having a few bills and bank statements will be useful so you can average several month’s worth of data.

Place each expense on a line and write down the amount next to it. You may find it useful to create categories of expenses like:


Consider expenses that may not be monthly, such as clothing or car maintenance. You should still budget for these items. If you allocate money every month for these things, that money will be available when you do need it.

Tracking and estimating your monthly expenses will be harder, but not impossible, if you frequently pay in cash. While cash is a good way to moderate your spending, you need to be diligent about collecting receipts if you want to know where your money went. A new benefit of credit and debit cards now that you can use them virtually everywhere, even for micro payments of just a few dollars, is at the end of the month you get a statement with all of your monthly expenses on one page. If you’re struggling with credit card debt, definitely stick with debit cards or cash. But if you can learn to use a credit card responsibly and pay it off in full each month, I actually think a good credit card can make budgeting easier.
– via Money Under 30

Can you see the value in establishing and working with a personal budget? How fast do you believe this will help your savings grow?

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