Personal Finance Budgeting - What are your expenses?Remember that when it comes to your personal finance budgeting, if you know exactly where your money is going, only then can you decide if you’re spending it wisely and really benefit from budgeting. Consider the following: • Fixed expenses: Those bills you have to pay and that tend to be the same amount month-to-month or year-to-year. They include: rent payments, school fees, car payments, furniture and appliance payments, payments on personal loans and credit cards, and your savings & investments. • Variable expenses: The amounts that vary from month to month and over which you have some control. They include: food, clothing, utilities, long distance telephone, club memberships, vacations, household supplies, gifts and contributions, personal care, recreation, babysitting, pets, and money for other miscellaneous purchases. •Your records: Keep well-maintained files that you can review. Include canceled cheques, credit card statements, receipts and ABM/debit transactions, and bank books. Now that you know your income and expenses.It’s time to put together a spending plan that will help you meet your financial obligations and reach your goals. Remember that your plan is a guideline, so be flexible and always keep in mind what is most important to you and why you are budgeting. • Make a note of your fixed and variable expenses. When you total your expenses, they should be equal to or less than your income. • If your first plan is too heavy on expenses, think about which expenses you can reduce without sacrificing the quality of your lifestyle. Fixed expenses are based on previous spending commitments, so they usually can’t be adjusted. • Look at variable expenses that may be reduced or postponed until a later date. • Be sure to include an emergency fund. Try to build a cushion of three to six months to help you prepare for the unexpected, such as car repairs, unexpected bills, loss of employment or illness. Setting up a peace of mind fund makes sense because not only will you be prepared financially, but you can use your money to avoid taking on additional debt. • Once you have a good estimate of expenses, subtract that figure from your income. The remaining money is what you can use for your savings which should be at least 20% if you're under 25 and 20% plus 1 percent for each year over age 45. • If your expenses total more than your income, you need to rework your figures or reduce your expenses until you have enough cash to meet your savings target of 20%. You owe it to yourself to fully understand the personal finance budgeting process! And here is personal finance budgeting help if you need it
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