Budgeting Basics

Today’s money tip offers insights on how to best establish and control your budget.

Setting a budget is one of the best ways to ensure that you are managing your money in the most effective way possible. To create a budget, there are three simple steps you should follow.

First, identify your current spending habits. If your income isn’t covering your expenditures, you may be spending money on things that are not absolute necessities.

Secondly, plan your monthly budget; taking into consideration all your expenses, as well as what you typically spend on them. Don’t forget to set aside a bit of money for life’s unexpected expenses.

Lastly, be sure to track your spending on a monthly or weekly basis. To save time, use a personal-finance program such as Quicken or Microsoft Money. If your annual income increases, try to stay within the same spending bracket. The temptation to increase your spending on luxuries can be hard to resist, but in the long run, the additional contributions you can make to your savings account will be well worth it.

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