MANAGING MONEY, Budget Help
An Excerpt from the book PERSONAL MONEY MANAGEMENT
For many families, the whole idea of managing money seems
bothersome and almost hopeless. They believe that money managementmeans
living by a rigid set of do's and don'ts, pinching pennies, and keeping
a lot of records.
Actually, managing your money has three simple aspects:
deciding what you want your money to do for you; creating a workable
spending plan, and following your plan with determination.
first step means making choices--deciding which of the things money
can buy are more important to you than others. Most of the money
we make has to be spent on essentials such as food, shelter, and
clothing. Nevertheless, there are many choices we can make. For example,
we can economize on food and housing in order to afford a better
vacation or pursue a hobby. Your family may enjoy sports or the theatre
more than a fancy automobile. Every family is different. Remember,
the idea is to make your money do what you want it to do.
Creating a workable spending plan means translating your
goals into a budget. How much for food, shelter, and other expenses
each month. How much you need to put into a reserve fund for infrequent
expenses such as car repairs or insurance. How much goes into savings.
You need not compute these amounts down to the last penny. But you
do need some kind of spending plan.
The last step is obvious but important. You must follow
the plan you've created and avoid financial detours. You shouldn't
be completely inflexible because unexpected money needs--or changes
in your overall plan--may arise. But you should be consistent and
reasonably faithful to your budget.
While some pencil and paper work will be required in
any money management plan,the bookkeeping needn't be complicated
at all. It can be as simple or as detailed as you wish to make it.
You can start with rough estimates and refine your figures later
on. The important thing is to have some records that show you're
following your plan.
Keep in mind that you're not keeping books for a company.
It's not important that you account for every penny spent but that
you control your spending and saving. The most important factor in
any money management program is your determination to control your
money so that you get the most out of your income.
HOW TO SET UP YOUR PLAN
Money management should be a joint family effort. Every
one old enough to spend money should be involved in the basic decisions
of how the money will be spent. Who will do the bill paying, and
who will keep the records. this is a good time to discuss personal
allowances and other individual expenses. Let all family members
participate, and they will be more inclined to cooperate.
You know that certain expenses are essential and others
optional. You also know that some of your income should be set aside
for savings. With this in mind, establish some priorities.
Set up a reserve fund for those once- or twice-a-year
expenses so that you can budget for them throughout the year. For
example, if you make two $300 life insurance payments each year,
you should set aside $50 a month for insurance in your reserve fund.
Use the budget worksheet as a guide in setting up your budget.
You know that by spending according to the amounts you've established,
your money will go where you want it to go.
WHEN ALL DOESN'T GO ACCORDING
Don't be surprised if your budget doesn't work out perfectly
all of the time. Expect the unexpected. Maybe this is the year you'll
be hit with an unusually large dental expense. Or next month an unexpected
auto repair bill. Don't let these emergencies shake your faith in
your spending plan. Here's where your savings can come to the rescue.
Or, perhaps you'll have a readjust your budget for the future. Maybe
you'll have to cut down on entertainment for awhile to spend more
on something more essential. These adjustments are perfectly normal
and should be expected. Make the adjustment and continue on from
there. But stick to some kind of plan.
MONEY MANAGEMENT HELPERS
You'll find the job of managing your money a whole lot
easier if you make use of these helpers:
Checking Account. Paying
bills by check gives you a permanent record of the payments. You
can simply go back over your check register or statement to find
out how much you spent for various items in your budget. To make
the job even easier, write a budget classification number or letter
(for example. "F" for food) on the check register. Your
records from previous years can be used in setting up your trial
budget. They'll tell you how much you have spent in the past for
Savings Account. Use
one or more savings accounts for your regular savings program and
for putting money in reserve for future expenses. Many people prefer
to put monthly contributions toward vacations, Christmas gifts, and
other once-a-year expenses into separate savings accounts earmarked
for these purposes.
As far as your regular savings program is concerned,
there is one rule to follow which will ensure success. PAY YOURSELF
FIRST. Deposit whatever amount you budget for savings into your savings
account every payday--before you have a chance to spend the money
on other things. You'll be amazed at how quickly your savings grow--and
how little you miss not having the money to spend.
Record Book. The
forms in the back of Personal Money Management, provide you
with a record keeping system that will be extremely helpful. First
write in the budgeted amount for each category. Later on, with the
help of your checkbook, write down the actual expenditures. You'll
be able to see at a glance how your actual expenditures compare with
the amounts you budgeted.
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Marketing Associates, P.O. Box 284, Deltaville, VA 23043. Personal
Money Management and To Help You Get The Most Out Of Your Money are
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