Finance: Constructing and Managing a Budgeting Plan

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Many of us find ourselves facing the trouble of financial debts. Before you know it, you are already at the brink of bankruptcy. The best way to avoid financial debt is to construct and manage a finance or budgeting plan. Rest assured it is not as intimidating as it sounds. There are just a few simple steps to follow:

First of all, make a list of your monthly and annual income. After that, make a list of all the expenses you make on a monthly basis. When you are determining your total income, be sure to list all the important sources like child support, alimony and any other side sources of income. When calculating your expenses, remember to include the basic expenses like food, housing, utilities, transportation, entertainment, clothing, etc. Don’t miss out any expenses.

To get an accurate estimate of your actual expenses, it is advisable you keep a personal journal and update it every night. Take note of all your expenses on a daily basis. Most importantly, always try to save the receipts of all your purchases or expenditure. Once you have the estimate of your overall expenses, sit down and take the time to determine whether your income actually covers all your expenses. If it doesn’t, then it is time to move on to yet another step - finance adjustment.

Cut down on some of your expenses, especially the luxurious and unnecessary ones. This might mean that you will need to reduce spending money on things like regular entertainment, buying new electronics from time to time, or downsize your living arrangement. Even if your income covers all these expenses, you will still want to trim down the extra spending.

There are some other things you should consider when constructing and managing your budget and finance plans. For example, consider your retirement savings, emergency finance or funds and debt reduction schemes.