Before you can think of investing money, you have to have money. Here is a simple seven-step process for creating and maintaining a budget.
Know how much money you have to spend each month. You might need a payroll calculator if you are starting a new job.
Fixed expenses are the items that will net fluctuate from month to month; these are things such as rent, car insurance and car payment, your utility bills or your student loan payments. Include your savings in this category, too. You will need to pay yourself first by placing about 10% of your income into a savings account every month.
Determine the variable expenses in your budget. These might be things such as groceries, clothing and entertainment. Not only do these fluctuate but you can cut them back if you need to.
If every dollar has a place to go then it is called a zero-dollar budget. When the amounts do not match up, you will need to adjust the budget and expenses accordingly. You do not want to over-spend; cut some of the variable expenses if need be.
Once your budget is set you need to track all of your expenses. It is one thing to have a budget, but quite another to actually use it. There are a number of pieces of software to help you in this area; a couple of these are Microsoft Money or Quicken. You can even use a ledger sheet; whatever gets the job done. Don?t? put this part off till the end of the month; you need to do a little bit each day.
You can adjust your budget throughout the month if there are things such as emergency repairs to add. You might save money on clothing in order to cover whatever repairs you need. If you do move any money around, make sure you adjust your budget or the change.
Always tweak and evaluate your budget. You might find that you can cut out a number of expenses after living on budget for a while.
With your budget well in hand, find out about investing from an expert in the field. Andrew Baxter discuses investing in the Australian Share Market in this very informative video.
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