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How to plan your budget?

Planning a budget is important as it offers you a clear idea as where your cash is going. It takes into account your monthly income and expenditure and this is the easiest way of reaching financial goals, if you have any.

Most people have financial goals in life like clearing of their debt, or saving money to buy a new home or investing money to secure their lives after retirements. No matter what your financial goal is, a proper Budget Plan can take you towards it.

Budget Plan

However, it is important that you stick to the budget you make and it should not be made just for the sake of it. It is really important that you do not spend more than what you earn, that is do not use your credit card.

Here is how to make a budget plan:

Take your time and get organized

Planning a budget is not easy and it takes a lot of time. So, do not rush to it as you will end up making mistakes.

You will also need a lot of paperwork and so collect them before sit down for making the budget. You will need the following:

*    Past few month’s bank statements

*    Past few month’s credit card bills

*    Household bill copies

*    Your pension and investment details

*    Anything else related to your income and expenditure

Add your income

The next thing that you need to do is add up all your income after making the necessary deductions. This includes all your regular incomes like the salary you earn (or the money you make if you are into some kind of business), rental income (if any), income from your saving or investment plans or everything else.

Just do not add your monthly incomes, add weekly and yearly incomes as well.

You can use a spreadsheet, a notebook or a computer program for creating your budget; just make sure to annual which is irregular and monthly income in different columns. At the end do not forget to make a grand yearly total.

Find how much you are spending

Make use of your bank statements and credit card bills to know how much you spend. Do not guess as it would ensure that you have accurate details on your budget.

Make sure that you add up your occasional spending that you make during Christmas or any other event like your birthday or anniversaries. Take your holiday expenditure in mind as well.

After adding everything, add up your monthly and occasional expenditure. You will get two totals. Divide the yearly amount by 12 to understand the difference between this result and the amount that you spend monthly on an average.

Draw a budget and abide by it

Finally, draw up a plan so that you can reach your goals.

Be realists and include everything you have to spend on every month. Take yearly spending as well.

Bring in small changes to save money. Avoid buying the takeway coffee that you buy every day.

No matter what, make sure that you stick to the budget you make.

How to Make a Budget Plan Budget Plan Template Sample Budget Plan