By Remez Sasson
Do you know how much money you earn and how much you spend?
Do you earn more than you spend?
Do you know where your money is going?
These are questions you should ask yourself in order to establish a personal or family budget, and keep track your earnings and your expenditure. Establishing a budget can help you keep track of every amount of money that comes in or goes out, and helps you save money and reduce debt.
A personal or family budget provides understanding of your expenses, and how you can reduce them. It helps you manage your income so it meets or exceeds expenses.
1) Start by summing up all the expenses of last month and compare the amount to the amount you earned. If you earned more than you spend that’s great, but if your expenses were higher than your earnings, consider this as a red flag, warning you to rectify the situation.
2) Divide your list of expenses into two lists, one list covering fixed bills and expenses on clothing, transportation, services and food, and another list for other expenses, such as entertainment, restaurants or vacations. Find out where you can cut off, where you can postpone the purchase, and which of these expenses are not really necessary.
3) Make a list of what you intend to purchase in the next six months. Can you take out of the list anything? Are all items really necessary? Take off from your list what is not so important, or find ways to earn more money.
4) Keep track of every amount of money that goes out from your account. Are all expenditure necessary? Can you cut out some of them? Are you spending more than is necessary on your insurance, food, clothing, gas, electricity, telephone or other services? You can always make a survey and shop where it is cheaper.
5) Find out where you can save money, and invest it in a saving account or a retirement program. No matter how much money you earn, it is important to put some money aside, which you could use on a rainy day.
6) Always remember to control and monitor your income and expenses. Be alert and know that your budget will change from month to month, so you will have to review it and make adjustments.
7) Be honest with yourself, and as accurate as possible when estimating your expenses.
8) Remember, establishing and sticking to a budget requires common sense, motivation and discipline.