Money Management & the Budgeting Process

Budgeting is a process that is vital for money management.

Budgeting is a process that is vital for money management.

Setting a budget for you and your family is a necessary step towards successful money management. Whether you plan to use software or prefer to keep track using paper and pen, the budgeting process is something that needs to be followed strictly and reviewed frequently in order for you to make any progress.

Income

When planning to manage your money, the first step in the budgeting process is to make a list of all sources of income you have coming in. Make sure to include the most recent three months for sources that are variable. If you receive a check each month that is based on a determining factor and can change in amount, calculate the average between the three months so that you have an idea of what you can possibly expect.

Expenses

The next step in the budgeting process is to gather all of your bills, receipts and statements and make note of where all of your money is going each month. This is vital when it comes to money management because this is the step that allows you to get a visual of how you need to change the way you manage your money. Separate the items into categories and mark whether each item is a variable expense or a fixed expense. Fixed expenses stay the same from month to month while variable expenses can change from one month to the next. Get in the habit of keeping receipts after you have put together the budget so that you can confirm that you are staying on track and managing your money well.

Goals and Percentages

After you know how much money you are bringing into your home every month and what you are spending your money on, you can set goals to change your spending habits or save enough money to go on a much-needed vacation. If your goal is to just build a savings account, allocate an affordable percentage of your income to go directly into your savings account. Treat your savings account like a bill and use it only for emergencies or when you have reached your goal.

Adjustments

After you have set your goals, whether they are to save for a car or to stop spending as much, look at your budget and make the necessary adjustments that make your goals attainable. Reduce the amount of times you go out to eat and start cooking at home once in a while. Instead of going to the movies every week, consider reducing this to once every two weeks or once per month. Review your budget and actual expenditures on a monthly basis at the very least; this keeps you on track for managing your money.

 

About the Author

Akeia Dixon is a freelance writer who began her professional writing career in 2009 for various websites. She enjoys writing about natural health topics but also loves to research and write about her findings on any subject. She is currently in school studying psychology and sociology.

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