Do you know how much money you earn and how much you spend?
Do you earn more than you spend?
Do you know where your money is going?
These are questions you should ask yourself in order to establish a personal or family budget, and keep track your earnings and your expenditure. Establishing a budget can help you keep track of every amount of money that comes in or goes out, and helps you save money and reduce debt.
A personal or family budget provides understanding of your expenses, and how you can reduce them. It helps you manage your income so it meets or exceeds expenses.
1) Start by summing up all the expenses of last month and compare the amount to the amount you earned. If you earned more than you spend that’s great, but if your expenses were higher than your earnings, consider this as a red flag, warning you to rectify the situation.
2) Divide your list of expenses into two lists, one list covering fixed bills and expenses on clothing, transportation, services and food, and another list for other expenses, such as entertainment, restaurants or vacations. Find out where you can cut off, where you can postpone the purchase, and which of these expenses are not really necessary.
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