How to budget your money?

Before you can do any financial planning, it is important to examine your income and your expenses. When you spend more than you earn, you are heading for financial disaster. Calculate every cent you spend daily, no matter how small it is. Everything adds up.

Steps

1. Calculate your regular income. Include that of your spouse also, as well as regular income from other sources.
2. Make a list of all income sources and amounts. Do you receive regular overtime or a large bonus? Is it guaranteed? Can you calculate average amounts by using past bank statements or pay slips? Try to be accurate and get to an average 'net' (after taxes) income.
   
3. 
   
   
   (Write down every daily expense no matter how small the amount)
4. Calculate your regular expenses. Save all receipts and expenses for one month. Ideally, you need to carry around a pen and small pad with you for one full month. Write down every amount you spend, what it is for and where you spend it. Much of the spending will be on large, regular items (rent, utility bills and grocery shopping, for example), but there will probably be many small regular items too (newspapers,magazines,coffee shops, snacks, haircuts and entertainment)
5. Look at the figures. Money coming in (income) and money going out (expenses). If your expenses are more than income, you need to take action!
   

Tips

• Don't rush budgeting.You need a month to figure out exactly where your money is being spent the most.
• If you find your expenses are extremely high, compared to your income, you have to cut back on some unnecessary spending.
• Very few people ever bother to budget, which is why so many people are in debt. Few really realize just how much they spend on worthless expenses.