Handling the Budget

Undeniably, the cost of living nowadays is so expensive and if you don’t know how to budget wisely, you’re in for TROUBLE.

To avoid encountering holed pockets and empty wallets in the most unwanted times, here are a few things you must do… budgeting (photo c/o fotosearch.com)

* List all your expenses
Every month there are so many  things where our money goes. Things that we need and things that we want. In listing our expenses, we are able to determine those things and how much we spend for them.

* Classify your expenses
For me, there are actually two kinds of expenses. The “Priority Expenses” and “Extra Expenses”. I think that they are self-explanatory already. Priority Expenses are comprised of two other categories. “Fixed Expenses” and “Adjustable Expenses”.

Fixed Expenses are usually the basic bills that we pay like phone bills, electric bills, water bills and house rental. We usually have a monthly estimated amount of how much do we spend for them based on our consumption. They are called fixed because you must pay them or else, you can’t use them.

Adjustable Expenses are things that we need but have a very flexible value. Examples of this are monthly allowance and grocery. We can cut some of our budget for them through other means and alternatives in some aspects involved. You can walk instead of riding a tricycle in going home. Bring packed lunch instead of eating in fast food chains.

On the other hand, Extra Expenses are usually those that are intended just for fun or luxuries. usual examples of this are gimiks, watching movies, dinner dates, and gadgets.

Now that we know our priorities in the monthly budget, we can already proceed to the next step.

* Determine your Savings
Ooops! So you thought that we’re finished already, right? Nope, we’re not done yet. One of the most important factors in handling the budget is SAVING.

Yes, you have to save some of your money too. Open a bank account or invest in a financial plan. When you save, just consider that you’ve already spent the money so that you won’t have to withdraw it from your account.

Remember, your savings will be very helpful to your future. You can start a business through it. Actually, the more you save, the brighter your future will surely be.

* Be sure to have an Emergency Fund
Last but certainly not the least is to alot money for emergency use.

Take note that this should be different from your savings. Why? Savings = Future while Emergency Fund = Unexpected Expenses. You should always have a ready money for unwanted situations. Getting sick or losing a job is something not planned so it’s really better if you always have some bucks ready for use.

Well, now it’s up to you to decide how much you’ll spend. Check your lifestyle and be sure to distribute your allowance wisely. Spend less and save more. 🙂


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February 2008
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