What is a budget? It is how you spend your money.
A budget is based on your income and how you spend it the best, to get the most out of your hard earned money.
I am not an expert but I do pretty good, most months I do have money left over, so I will share how I spend money.
First: I will say this over and over, you must pay the rent or mortgage to have a roof over your head. The monthly payment should NOT be more than one third of your income. If you are paying more than this per month I suggest that you move into something more affordable and suited for your income bracket.
Second: Should be car payment, if you have one, because you do need a way to get to work. If you have paid the car off you are ahead of the game. If you use public transportation that is also a cheaper way to go and should be accounted for as out of pocket weekly/monthly spending. Car insurance is enforced in the USA, you must have insurance to drive and you must have insurance to get a tag for the car.
Now to its the utilities, food and the other bills.
This is something else I have to say over and over, some things are MORE important than your cell phone, DO NOT pay that bill first!
First – Since most homes are total electric that is what needs to be at the top, of the utility paying. You need power to cook and keep food.
Second – Water. Water is essential for life. Ever had one of those days when the water company was working on the main line and the water was off? Remember how sucky that was?!
Third – If you are on life saving medication. High blood pressure and Diabetes medication, etc. Without medication you are dead so nothing matters anymore.
Forth – Food. Yes that is right food comes next because without food you die. That is buying food at the grocery store/ farmers market and cooking it yourself. Going out to eat daily is just throwing your money out the window of a moving car.
Fifth – Health insurance. Although we do not get in trouble for not having it anymore, it is important to buy the minimum.
When I write down the monthly outgoing bills I have to say that phone, internet and dish/cable comes to the very bottom of the list and if I do not have the money to pay for one, then I do without it because you can live without those three. I would like to add that a cell phone bill should NEVER be as much as your power bill per month! If a cell phone bill is that much or as much as your mortgage, you need to learn self control.
Another thing is, do not use ANY credit cards. Only pay cash or use your debit card [money you have in the bank, a checking account] for everything. By using credit cards you are ruining your chances of getting ahead in life because of the monthly applied interest.
Each month you should put back a certain amount of money for those things that may happen and you`ll need cash. For instance, car repair or something unexpected like that. If you do this weekly or monthly as if you are paying a bill, then you will accomplish saving.
- Rent/ mortgage
- Car and auto insurance
- Power bill
- Water bill
- Health insurance
Luxury bills – phone- internet- cable/dishSavings.
That is my take on how to make and live by a budget.
Do you live by a budget?
By Andria Perry
Photo by Andria Perry