How do you come up with a budget?
Original post:
>>>I was wondering if anyone has a list of budgeting guidelines. I've seen a
>>>list that said you should budget X percent of your monthly gross income for
>>>food, X percent for clothing, X percent for rent,etc.
Micheals reply:
>>Throw out percentages. You aren't an "average" person, no one is.
>>First things first -- find out what you do. Record every single
>>expenditure you make -- down to the penny (at *least* the dollar).
>>Programs like Quicken can help you track this. Once you're used to saving
>>receipts and spending a few minutes once a week inputting them, it's not
>>any harder than balancing your checkbook.
>>
>>It is my belief that a full record of expenses is essential to saving
>>money, and is all that most people will ever need to do to contain their
>>expenses. The biggest single reason we spend too much money is because
>>we're in denial. As long as we don't have that record staring us in the
>>face, pointing out that we spent 200 dollars last month on some useless
>>crap, we can maintain the comforting illusion that we *had* to spend all
>>that money.
>>
>>Michael
Reply to Michael's reply:
>Congratulations to Michael. First on reading the original question
>properly. Second because of his right approach.
>One problem with us who post Q and A is that age is not involved and
>maybe it should be. For instance I may ask a question and receive
>answers from someone who is old enough (or young enough) to be my
>great-grandson!--
Second reply to Michael's reply:
My Congratulations go to Michael too. I am also a faithful follower of his
method. YOU have to write down every dollar you spend during a month and
then categorise everything and compute a percentage of your take home pay
that was spent on each category! Some expenses may astonish you!
I learned this from my Dad and those days I used to think that he was way too
meticulous in balancing his income and expenses. But when I started to earn
and pay for my bills, I realize the value of taking account of your expenses.
With this method I consistently save +30% of my take home pay. On top of this
I contribute to the 401K (pre-tax). My standard of living is still the same,
but I do not spend on excessive stuff. I would like to drive a brand new car,
eat out everyday (not a healthy choice), buy clothes every month, but then,
you will end up with a zero bank balance. I prefer to have money for a rainy
day than going into debt up to my nose!!
After you make a habit to save, then you can think of investing and making
your money grow with time. So start now!!
Kanishka
(
geocities.com/vyque)