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7 Tips on How to Set Monthly Budget and Save Money

7 Tips on How to Set Monthly Budget and Save Money

If you are wondering where the money all went before you even have a chance to build any savings, you should really think about setting a monthly budget for your household. We have prepared this guide for you to give you an idea about how to make budget and figure out where you can cut down the expenditures.

1. Be aware of the exact number of your monthly income.

The first step is to know how much exactly your income per month is. If you are being paid twice each month, you should double the number on your paycheck. Multiple the numbers on every paycheck by 2.17 or 4.33 in case you are paid bi-weekly or weekly. Put the number of your monthly income on the top of a paper. If you or someone in your household has multiple jobs, also include the income from those jobs as parts of your monthly income.

2. Write down the fixed monthly expenses.

The fixed expenditures include utility bills, insurance, loan payments, child care and transportations. If you are not sure about the number, look them up from the most recent bills. If the bills vary from month to month, get an average between last several months and record the amount on your budget.

3. Calculate how much can be spent on other things.

Now you have the number of monthly income and the fixed expense, and you can subtract the latter from the former to learn how much money is left to be spent on other things. This part of money can be called as expendable income.

4. Decide a number to be saved.

The money to be saved should be a part of your expendable income and you should decide the number according to your personal preference. $50 or $100 per month is a good start but if you have a more ambitious goal, just set it and stick to the goal. It makes the saving process easier by request your employer to set the automatic transfer of part of your income directly to your saving account.

5. Divide the rest of expendable income wisely.

Now you have the remaining expendable income and the money is for groceries, entertainment, dining out, clothing, pet care, personal hygiene, electronics, or any other household purchase and services. Additionally, you may want to include some money each month for miscellaneous purchases that can’t be fitted into any of the existing category.

6. Track the spending for at least a month.

When you set the budget and try to save money according to the budget plan, you should keep recording your spending habits for at least a month. Write down the actual spending in every category and see if it fits the budget you allocated for that category. If you are spending less, then it’s ok. But if you are spending more, you should make some adjustments on the budget allocated or change your purchasing habits accordingly.

7. Use help from worksheet or other resources.

You can use worksheet to organize your budget and also refer to help from some other websites or software, which all help you keep better tracking of the expenses.

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