Simple budgeting tips to avoid desperate debt relief measures

‘I wish I had planned my monthly budgets earlier!’

This is what you end up saying every time after you face a severe financial crisis due to some insensible overspending. Well, lamentations and last minute sighs never help in resolving problems. If you sit back and think nothing is going to happen by itself. Instead of wondering where your money goes every month, it is better to search for the solution that actually works. And it is better to start things right away before it gets out of control.

It may be that your income level is not high, but that is not a problem as many individuals having huge income are victims of debts as well. It is important that you maintain a balance between your income and expense right from the beginning. Why to look for debt consolidation or settlement programs when with just a minor change you can live a better life.

In order to chalk out a well designed budget plan you just need to follow some basic guidelines. If confused check out the following to get a clear idea:

1. Critically analyze your financial situation- Your primary task includes assessing your current financial situation. This helps you to know where you stand with your finances. If they are in a poor state you will know where to make changes with expenses in order to restore them.

2. Know your total expenses- Make a list of your income and expenses be it weekly or monthly. These include your mortgages, loans, insurance and credit card bills. There are also essential expenses that will be counted as rolling expenses. (For example, monthly ration, electricity bill, laundry, and conveyance). After the bare essentials are coped up you can leave a part for recreation. (For example, dining out, buying a household item or a new shirt).

3. List down your rolling expenses- Maintain a separate list of your rolling expenses. For example those that you need to make each month especially the daily necessities. If there are any loans which have interest or late fine levied, consider paying them first.

4. Allocate money separately- You can separate your expenses under different columns and allocate money likewise. After your income has been divided you can have a fair idea of how much you are actually left with. You can allocate this left out money into your ‘savings’ column that can be utilized during emergencies.

5. Keep track of your everyday expense- Maintain a list of your expenses on a daily basis. This helps you to understand where you are overspending and where to curtail expenses. If you are not careful your expenses may accumulate to a sum where you will be bound to take the help of debt settlement programs to get your finances manageable. Therefore it is better to be careful than suffer later.

6. Spend according to your priorities- Prioritize your expenses so that when you are short of money you just stick to the bare necessities.

7. Shop prudently: If you a bit prudent with your spending habits you can save a lot deal more. When buying in bulk look for retail shops where you get discounts and reduced prices. You can also shop for clothes in shops where ‘sale’ or discounts are given at regular intervals. By doing so you can fulfill your necessity at the same time avoid hampering your budget.

8. Avoid reckless spending- Try and reduce reckless indulgences like restaurant meals, branded shopping, movie rental or subscription to various magazines. These indulgences are suitable when there are no financial problems. Instead of spending recklessly you can use the money saved for paying off your loans and mortgages. It will help you to improve your financial condition.

9. Look out for extra income- If you find that your income is too low for fulfilling your basic necessities, then try out for a secondary income source. If you have extra rooms you can give them out on rent, or if you are a good cook you can sell homemade stuffs. This will supplement your income and thus you can manage your monthly finance better.

10. Always save: Whenever you get your salary or any money keep a separate percentage as your savings. The percentage may be too small but the habit will be beneficial in the long run. After some time your savings account will hold a considerable sum of money. This money can be used as backup during any emergency situation or while gift-giving occasions. The important part is about inculcating the habit of savings.

Budgeting is not an easy task as you may have to make a lot of compromises with your lifestyle. You need to be conscious of every penny that you spent. You may even have to curtail on expenses that you previously thought does not make any difference.

At the end of the day when you find your finances completely under control it is the best think to have. With a planned monthly budget you can live a comfortable life free from the hazards of debt. What can be better!

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