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Expenses come in several forms:
Fixed expenses that occur every month at the same amount, such as mortgage, rent, car payment, insurance
Variable expenses that occur regularly, but are subject to fluctuation, such as groceries, gas, utilities
Discretionary expenses that determine your particular lifestyle, such as clothing entertainment and vacations.
After you have looked at current receipts and determined your total expenses each month, compare that to your total income.
If your balance is in the red, you will have no money to set aside for reserves ready for future emergencies, and no preparation for retirement or college for your children.
Perhaps you are like most single moms who, when they hear the word "personal budget," imagine all sorts of constraints and end to the good life.
However, a personal budget is not an arbitrary set of prohibitions; a budget is simply a personal plan, your plan, which leads to prosperity.
It's your own personal road map that tells you exactly where your money is going.
Again, this is your personal budget.
If you love to order take out pizza, put it in your personal budget.
If you like going out to Burger King with your kids, put it in your personal budget.
A personal budget doesn't mean you stop doing the things you love.
A personal budget means that you are now spending your money on purpose, and you've chosen how you are going to spend it.
The Process of Arriving at Your Personal Budget Plan is a Relatively Simple One
Plan your personal budget and work your plan by using the budget worksheet you created to develop your own plan.
This is a simple way to project your monthly expenses and compare that projection to the reality of your income.
If you are spending all you earn, the inevitable result of your lifestyle will be debt.
Remember, when calculating your total income to include all current sources: Salaries, bonuses, interest, alimony, royalties, rents, cash gifts, social security, etc.
Now, subtract your expenses, your "out go," from your income.
Is Your Personal Budget in the Red or Black?
The previous simple math step will reveal if your plan is operating in the red or has positive cash flow.
If this is the case, go back to your expenses and rework your personal budget.
You must find a way to either increase your income or decrease your expenses.
Once you've determined your plan, or personal budget, employ a method of dividing your money into your pre-determined accounts.
Some single mothers use envelopes; some go online and use an electronic envelope system.
Whether it's an accordion file or a well-disciplined checkbook, use some form of accountability and organize your personal budget.
Now that you know how to create a personal budget and spend your money, support your decisions and follow through.
Tired of the debt lifestyle?
Tired of the debt lifestyle?
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