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Tuesday, February 24, 2009

Personal Budgeting Strategies

By Kay Riter

When you are coming up with a budget, you are going to have to specify it to yourself. Don't think that there is a budget that someone out there came up with that you must follow. Your needs are different than the needs of everyone else. A single person might only spend $200 on food every month. This doesn't mean you have to feed your family of 6 on $200 a month.

There are some basic personal budgeting strategies that you should try to follow to make the best budget for you. Start by recording all the money you make. Include everything from your regular salary and tips to overtime, interest income, and investment income. Include everything you make.

Take every opportunity that comes your way to make extra money. Any career probably has some opportunity to make a little extra money. If you're a teacher, you can tutor on the side. If you're an accounting at a big firm, you can do taxes during tax season. Even if you don't think you're current job lends itself to anything extra, you can get any kind of part time job or just think outside the box.

Next, you should really examine all of your expenses. Write down every expense for 2 to 4 weeks. Don't miss anything, no matter how small the expense. Analyze where you are spending your money. Anything that you could easily live without cut out, and anything that has a cheaper alternative, swap.

Try to cut back as much as you can on expenses. If you are spending money on things you don't need and don't really want, you are passing up a lot of savings. You need to get in the mindset that life isn't about stuff.

Come up with a good plan. Make it something you can stick to. Don't deprive yourself, but only spend money on things you really need and really want. Don't be stingy, be frugal. There is a big difference.

On the other hand, if you have tens of thousands of dollars in debt or more, you may seriously need to consider a downgrade on everything. If your rent or mortgage is too expensive, downgrade. You need to do whatever you can to secure your financial future.

Stick with your budget. This is the most important thing you can do. Over time, you will start to see your savings pile up. You might even be able to retire early. If you think it's impossible, you either need to change around a very unreasonable budget, or you need to take a good hard look at your spending habits.

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