It has never been more important to handle your debts in a responsible manner than in today's economy. Having a responsible debt management plan in play is going to make life in the present and in the future a lot easier on you and your family. We all know that expenses are a part of daily life and we are always being required to make one sort of payment or another by using cash, debit cards, credit cards, ATM withdrawals and checks. If you are not responsible in how you manage these things you are going to start getting confused about where all of the money is going.
You need to be able to sit down and work out a budget that is going to work well for you and your family. One of the first things you need to do is make sure that you know what your different categories are that are part of your budget. If you try to rely upon far too over generalized categories and budget you are going to end up overspending when you should be saving. Some examples of some specific budget categories would be:
- Auto (gas)
- Auto (upkeep)
- Auto (insurance)
- Health Insurance
- Loan (home)
- Loan (school)
- Clothing (school)
- Clothing (work)
- Home (repairs)
- Home (improvement)
This by all means is not the extent of the different categories. This list is just to give you an idea of how specific you should have your different budget categories.
If you want to maintain a good budget then you are going to have to be organized. In order to be organized you need to keep good records of all of your spending. How you do this is entirely up to you. It can be done by hand in a ledger book or you can do it but putting your budget on an Excel worksheet. However you decide to do it, you need to be consistent and always remember to record everything that you spend money on.
If after you make your list of categories you notice that you still look like you have enough left over for savings and investments, then you should add these categories to your budget list and then make sure that you do your best to include money in these categories as well.
You need to make sure that you include a rollover into your budget. What this means is if you spend say $100 on clothes one month and your budget is $150 then you need to allow that $50 to roll over to the following months budget. On the other hand, if you happen to spend $175 one month on clothes you need to roll it over as well but the amount allowed for the following month should only be $125 for that month.
In order for your budget plan to work it is important to not only follow the above pointers but to also make sure that you check your budget often.