7 Ways to Create a Budget ...

Ways to Create a Budget are numerous and quite easy – once you train your thinking. Although there are many ways to create a budget, there are also lots of reasons to spend money. The key is figuring out what's necessity and what counts as a luxuries. The luxuries get us all in the end – but I'm getting ahead of myself. First read about the best ways to create a budget, then figure out where you can curb your spending and start saving money.

1. Gather Financial Statements

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One of the most essential ways to create a budget is to start out by knowing where your money needs to go. You can do that by gathering up your bank statements, utility bills, and things of that nature, to see what you're paying out every month. That way, you can figure up your average monthly spending habits.

2. Create List of Monthly Expenses

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You also need to know what comes out every month. That includes rent or mortgage payments, car notes, insurance, your groceries, your utility payments, any savings, and anything else you regularly spend money on each month. You have to be honest; if you spend $300 a month eating out, write it down!

3. Record All Sources of Income

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You also have to know where you have money coming in. This is one of the most important ways to create a budget, because it can show you whether or not you're spending more than you make. Naturally you have to include your paychecks, but if you do anything on the side or work as a freelancer in any aspect, include that income as well.

4. Categorize Your Expenses

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With all of that information, you can now split your expenses into two different categories. Money that goes into things like rent, car notes, internet, cable, credit card payments, and so on, go into the fixed category. Luxury items or things that change every much, like food, entertainment, gas, and things like that are part of the variable category.

5. Income Vs. Monthly Pay out

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At this point, you have to figure out what you're making versus what you're paying, which is one of the most crucial ways to create a budget. By totaling your income and comparing it to your total monthly expenses, you may find out that you're spending more than you make. Regardless, this technique can help you create priorities, because there are some things you can live without while others are too important to let go.

6. Make Cut Backs

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At this point, you need to see where you can cut back. Everyone can trim the fat in little ways, even if it means taking leftovers to lunch or making your own coffee instead of buying it at Starbucks. Find out what things you can live without, and try to cut back on them, or quit doing them entirely. That's not possible with everything, of course, but many things can be eradicated completely.

7. Make Cut Backs

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Once your income and expenses have been tallied up, you need to start reviewing. After making cutbacks, you can see where you'll be saving each month. In fact, you need to review your budget every month, just to see how you're doing. One of the best ways to create a budget, you see, is to stick to it.

These are the best ways to create a budget because they help you stay accountable for what your spending. And don't worry, if you're spending more than you make each month, it's a common problem. Few people pay close attention to what goes out every month unless they need to, but that's why it's important to learn all the ways to create a budget. That way, you'll start saving, and that extra money comes in handy. Do you know any other ways to create a budget that might be helpful?

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