A Personal Budget is Necessary First and Foremost

First and Foremost, you need to have a personal budget. If you do not take the time to plan your uses with your money, you will never get anywhere. Besides having a budget, you have to have some personal constraint and know when to say "no" to certain things, such as that pair of cute pumps on sale at Macy's that you really don't need because you already have 20 pairs in your closet. The budget needs to be designed to let you be able to pay all of your monthly obligations, yet let you be able to have a little fun, too!

To begin, make a list of all of your monthly obligations and write down their amounts and when they are due. For example, my mortgage payment is due on the 15th and my car payment on the 26th. Also, plan out any major expenditures that you are planning to make during the next 6-12 months and you can try to work those into your financial plan. Next, determine your income for each pay check. If you are on salary, it is a piece of cake because your income will not change from pay period to pay period. If you are an hourly employee, use the average number of hours that you worked for the past 3 months for each pay period and base your budget on that. You will need to calculate your net pay and I have included a link for you to EASILY calculate your net pay after taxes for your budget: http://www.paycheckcity.com/copaycycle/netpaycalculator.asp

Now it is time to set up your budget. Below is the actual budget format that I have used for the past 3 years and it has allowed me to live freely and make my money grow! The budget did change when I bought my home and it is shown below at the current status. I have also explained what each line is.


Check One $$$$.$$
General- all food, gas, entertainment, and anything fun I want
Savings- I pay myself with every paycheck
HOA- Home Owners Association (Only $32.50, but I still plan for it)
Credit Cards- I budget for credit cards $100 every month
IRA- I plan for retirement and put a little away every month
Mortgage & Bills- Mortgage payment and bills such as electric, water, cable, and phone.


Check Two $$$$.$$
General -all food, gas, entertainment, and anything fun I want
Car Payment- monthly car payment
Insurance- auto insurance
Savings- yes, I pay myself again
Cell Phone- my cell phone and wireless Internet laptop card
IRA Account- a few dollars that I have left over go to my retirement account.

If you notice, I have savings scheduled as an expense in my budget. Many people fail to do this and have to live paycheck to paycheck. I always pay myself, even if it is a little bit and put it into a savings account. I am not saying that you have to use my exact format, but it is a general idea of how to make a plan. Everyone has a different financial situation and your budget has to be designed to fit your needs. If you have any questions, you should seek a professional financial planner to help you out.

Remember one thing as you leave my blog page: "Fail to plan, plan to fail."