3 Smart Secrets to Budgeting

What small tips and tricks have you found that made a difference in your personal finance life? What great article did you just read? Found a great blog?

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cashito
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3 Smart Secrets to Budgeting

Postby cashito » Tue Dec 10, 2013 7:07 am

There’s nothing more we want than to be able to efficiently manage our money. After all, the money that we want to manage is money that is oftentimes, hard earned. This is where a budget comes in. A budget executed properly, should help you see where your money is going, get more utility out of every buck, and help you save some extra for future use.
I want to share with you my top budgeting tips
1. Set a goal

The first smart secret to a budget is to set a goal. What do you want to achieve? Do you want to correctly appropriate your income into bills payments? Do you want to put an amount aside for a big purchase or a huge investment? By having a goal, you will be able to shape your budget to best serve your interests.
2. Monitor where your money is spent
Secondly, you would want to take note of where your money usually goes. This includes bills, major but regular purchases (like grocery costs, healthcare costs, and the like), and everyday miscellaneous purchases. Only when you list down where you know your money usually goes will you be able to identify which expenses you can do without.
Once you’ve identified these regular expenditures, take into consideration what you can cut back on. How much do you spend on your daily caffeine fix in the morning? How much do you spend on newspaper deliveries to your front door?
The measly $2 or $5 of these small purchases cumulatively translates to more than $3600 a year! Instead of buying your expensive latte or reading the newspaper on print, put aside the amount you would usually pay for these small routine purchases in a small container. You will be surprised at how much you’re saving out of your older budget.
Being indebted is a vicious cycle on its own. You’re talking about continuous payments, not to mention huge interest rates. The best way to deal with this is to pay the minimum on all of your debts in order to avoid paying extraneous late fees. Whatever cash excesses you may have, you can opt to add on to the payments you make in your biggest debt. This way, you are concentrated on getting the biggest debts first that cost you the greatest interest rates. Doing this progressively, you’ll be amazed at how much you’ll get off your huge debts.
3. Keep track of your monthly budgeting progress
The last and most important step is to jot down the amount you earn the sum you spend. You can make use of computer cash management programs, or make

Jerry
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Re: 3 Smart Secrets to Budgeting

Postby Jerry » Mon Dec 16, 2013 11:32 pm

Thanks for the tips, Cashito! Before you formulate your budget, the most important thing is to get a clear idea about your income and your expenses. This will help you in knowing whether or not you are unnecessarily spending your hard earned money. If you can stop that, then you can easily maintain a good budget. So, for me the second tip given by you is the best.
Jerry
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workhardsaveharder
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Re: 3 Smart Secrets to Budgeting

Postby workhardsaveharder » Sat Dec 28, 2013 6:13 pm

Nice post cashito.

I agree with your steps, and I also find that you need to be very diligent with capturing all of your regularly recurring expenses. It is only after you have a strong handle on your outflows that you can analyze how better to minimize them and, therefore, maximize your inflows. I recently wrote an article about this and budgeting all year greatly reduced the stress of shopping for friends and loved ones this holiday season.

Best,

Will

johnt78
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Re: 3 Smart Secrets to Budgeting

Postby johnt78 » Sun Aug 10, 2014 10:52 pm

If you have realized a savings in your routine financial activities, pull that cash aside into your emergency fund or large purchase savings account. Even if it is a small amount this will help in the long run.

John C
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Re: 3 Smart Secrets to Budgeting

Postby John C » Thu May 07, 2015 1:59 pm

So Budget consists of three components: Budget Category, Amount and Period.
Through years of budgeting I worked out that...

1) Generic/High-level Budget Categories create a much more transparent and easy to use Budget. Say I have Category called 'Car', which includes insurance, gas, oil changes, car loan payments, EZ-Pass, etc. - anything that relates to owning a car.
Some people would keep 'Gas' separately. Or insurance would be under 'Car Insurance' budget. For me that's too much work. I like keeping it simple. When I look at my monthly budget - I see half a dozen categories. That's it. But I can always drill-down in my actual to budget view to see actual transactions associated with that Budget Category.

2) Amount. - Whatever tool you use - you should have a screen where you can compare Budget and Actual amounts. Tracking actuals against budget is the most critical step. And it should be represented in a very intuitive way on single screen.

3) Period. - Month is generally the most convenient. I remember when I was pushing the envelope (right after I purchased my first house) - I also managed weekly budgets. But only for selected categories. That's in addition to my monthly budget.

For me budgeting is fun. I like to have a plan and then I try to stick to it. I know budget amount will always be different from actual at the end of the month. Budgeting is not about predicting the future. It is about managing your future while knowing it is unpredictable.

edward222
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Re: 3 Smart Secrets to Budgeting

Postby edward222 » Tue May 12, 2015 2:18 am

In this tough economy where job losses are rampant, home values are in the toilet and wallets are tight, budgeting is more important than ever. If you and your family want financial security, following a budget is the only answer.

Great tips:)

VinTek
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Re: 3 Smart Secrets to Budgeting

Postby VinTek » Fri May 15, 2015 7:55 am

edward222 wrote:In this tough economy where job losses are rampant...

Ya think?
Image

edward222 wrote:...home values are in the toilet...

Actually, it looks like they're just reverting to the mean.
Image
edward222 wrote:...budgeting is more important than ever. If you and your family want financial security, following a budget is the only answer.

Gee, and I thought the answer was finding a way to earn $3K a month online.

AspiringGreatness
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Re: 3 Smart Secrets to Budgeting

Postby AspiringGreatness » Fri Jun 12, 2015 5:11 pm

2. Monitor where your money is spent
...this is crucial. Many of us know the money is coming in but don't take the time to really see where all its going out to. We become complacent and numb to unneeded expenses.

Great share, thanks! :)


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