Taking the time and effort to sit down and concentrate on creating a budget usually sounds like the most demanding and unexciting thing. No matter how it is argued creating and sticking to a budget will eventually help keep an individual financially healthy. It is important to note that the more accurate information is forthcoming the better and more realistic the budget planning exercise will be.
How To Make It
Withholding information or presenting distorted and incorrect information will not benefit in any way and will only end up frustrating all parties when the said budget does not work.
The following are some tips on how to go about creating a budget:
Compiling all financial statements available for close scrutiny. This should include bank statements, investment accounts, utility bills and any information of sources of income and expenses.
The idea behind this exercise is to be able to create an average monthly spread sheet so the more detailed the information the better.
Keeping an up-to-date version of all sources of income is the next step to be taken. This may vary for those in the self employment sector or for those in business. However for all types of income taking into account the monthly total income amount is what is needed.
Next there should be a very detailed list of monthly expenses created. Every detail should be included no matter how small or seemingly insignificant it maybe.
The item included should be the likes of mortgage payments, car payments, auto insurance payments, groceries, utilities,entertainment, dry cleaning and laundry expenses, auto insurance, retirement, college allocations, saving and essentially anything and everything that the individual spends on.
Total both the income and expenses based on monthly calculations and then make the adjustments where necessary, especially if the expenses are more than the income. Make cut back or cut out wherever possible.