Control Your Debt: Create a Personal Monthly Budget
If you’re reading this article, you’re most likely looking for a way to have control of your finances. The best way to do this is to create a monthly budget and committing to it. Having a solid budget is fundamental for managing your finances, one that has allowed me to live well even on limited funds. One of the most important things that I do every month is planning my monthly budget, this has allowed me to consistently meet all expenditures, grow my savings, and reduce debt.
I map out my budget for the upcoming month on about the 20th of the current month. This provides me with a better view of my expenditure in the upcoming month. It’s not a good idea to produce a budget after getting paid because, too often, that flush feeling of having a paycheck results to uneccessary and spontaneous spending before the paycheck ever reaches the bank.
Managing my personal budget involves outlining all the things that must be paid that month like mortgage/rent, utility bills, and other necessities like insurance, auto loan repayment, transportation costs, and phone. These are the crucial things that I must pay to keep a comfortable roof over my head. I like to pad these requirements to produce “money back” after paying the bills and, if costs increase circumstantially, I’m always covered.
Next, my budget is subjected to a list of discretionary things I need to cover but could live without if absolutely necessary. An example are monthly savings deposits, credit card repayments and donations. These things are also important, but in case of emergency I could put them off for a short time. By paying credit card companies the maximum instead of the minimum, I keep my credit score high and my debt low.
My budget does not include the cost of living such as food and entertainment. These expenses get covered by what’s left over and that’s that. Some months involve lots of beans and rice, slow-cooker meals, free or cheap entertainment, and only one inexpensive piece of clothing . This strategy of overseeing my monthly budget has worked out very well over the long term as long as I observe it religiously.
