Personal budgets are good ways to monitor how you save and spend your money. Likewise, family budgets allow you to do the same. This makes planning a trip or big purchase easier, because you can plan to have the money you need. Creating a monthly budget can help greatly. Even though there can be a lot of numbers involved, it doesn’t have to be hard. Here are ways to make your personal financial planning as painless as possible.
Start with what you know. Save all your receipts for 1 week, and write down everything you spent money on. You can categorize your purchases, like food store, car & gas, restaurants, and so on. Don’t worry about trying to control what you buy, just record what you buy as you go about a normal week.
Here is an example:
|Car & Gas||$65|
In this personal budget example, we spent $370 for the week, but we spent almost 1/2 of that at the food store. Perhaps we are buying too many groceries. This way, you can identify what you spend your money on, and you can cut back there.
The next step in making a personal budget is to include your salary. Make sure you use your take home pay, meaning your pay after taxes. If you are paid weekly, it’s easy, just divide by 2. If you are paid monthly, multiple your pay by 12, then divide by 52 to get your weekly salary. Now your table might look like this:
|Car & Gas||$65|
In the example, our salary is $519 per week. When we subtract the total spent from our salary, we get our savings, which is $149.
Now that we know how much we can save every week, it’s time to decide what you are saving for. Whether it’s paying debts, a vacation or big splurge, retirement, or just having a safety cushion, a personal or family budget can help you. Write down the cost of what you want to buy. This amount becomes your target savings. Let’s say we want to take a vacation, and it will cost $4000.
Now that we have a goal, we can find out how long we need to save until we can afford our vacation. Divide your goal amount by your weekly savings: $4000/$149. That gives us about 27 weeks of saving. Don’t worry if it will take a long time, personal budgets and family budgets are for long term planning, and as you discover what you spend money, you might find that you could reduce your expenses, and therefore increase your savings.
We hope this will be helpful as you create a family budget or personal budget. Happy saving!