Finance Den: Creating a Personal Budget Plan

No matter your income, developing a personal budget is an important step to improving your financial security. A budget helps you understand where your money is coming from, where your money is going, and helps you determine ways to improve your money management. This helps you set realistic goals to improve your financial health, and decreases financial mishaps and stress. 

• Determine how much money you have coming in, and how much money is going out. You can keep track for a month or so in a notebook, use bank statements, receipts, and pay stubs, or use a budgeting app. Maybe you have a surplus of money coming in, maybe you barely break even, maybe you aren’t making ends meet. Either way, you can’t budget and improve your situation if you don’t really know these numbers.
• Once you know how much money you are spending, break it down into two more categories – absolute necessary to survive expenses, and other expenses. Your top priorities are likely shelter, food, utilities – to keep you and your family healthy – and transportation – so you can keep your job. Other expenses might include money spent on entertainment, and other things that are nice or fun, but don’t determine life or death. 
• Examine your necessary spending, and determine immediate disasters (such as eviction or utility cut off), as well as where you can cut back. Expenses can often be shifted or negotiated. If you are short on rent, which often isn’t very flexible, call and ask for extensions or payment plans on some other bills or expenses. Be careful to not over promise, and stick to the agreements to avoid further issues down the line. Sometimes you can even negotiate lower bills, lower interest rates, or waive late fees. It simply requires communication. 
• Don’t deny yourself everything, or you won’t stick to your budget. Maybe it’s just $20 a month, but give yourself a little bit of leisure money each month to treat yourself with. 
• Keep checking in on and adjusting your budget every month or two. Budgeting is not a “set it and forget it” activity. It may take some time, but your control over your finances will improve. If you are behind, the knowledge budgeting gives you will help you catch up. If you are breaking even, the knowledge can help you find somewhere to get some extra money for other financial goals. If you are ahead, the knowledge can help you plan to invest and grow your money.