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Author: Joseph Kenny
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The first step in beginning financial security is creating a
personal budget. In order to plan a personal budget you have to
know how much you possess and how much you owe. On the asset
side of your life how much money do you have in your wallet?
How much savings do you have in the bank? Do you own your own
home or do you rent or do you have a mortgage on it? Do you own
your car or do you have a loan on it?

These are all the initial items for consideration for building
a personal budget. On the liability side you need to list the
monthly car payment, the monthly rent or mortgage payment,
utilities, charge accounts or credit card payments and other
maintenance and upkeep expenses. You finished your basic
homework now let's create a monthly personal budget.

A personal monthly budget is used to estimate what you earn and
what you pay. It gives you an alert if you can plan in advance
what each month you will earn in salary, dividend earnings and
it will allow you to determine how much you will owe.

This is how I would set one up.

At the top of the list place the following categories on the
left side of the sheet, projected monthly income, actual
monthly income and on the right side place the categories,
projected balance, actual balance, and difference, these will
be handled after you total your debts. Under projected monthly
income list the following subcategories, income1, extra income,
and total monthly income.

Under the major category of actual monthly income list the
following subcategories income1, extra income, and total
monthly income. Beneath this header place the following
categories, housing, transportation, insurance, food,
entertainment, loans, taxes, savings or investments, gifts and
donations and legal. Each of these categories will have
projected cost, actual cost and difference columns added to
each row within these major expense divisions. Each beginning
of the month you must predict the next month's expenses, during
the month as you pay those expenses enter that amount into the
actual cost column. The end of the month you should enter the
difference between the projected and actual cost into the
difference column.

You remember those categories on the right side, projected
balance, actual monthly income and difference? They are
calculated by subtracting the total expenses from each balance.
The difference is obtained from subtracting the actual from the
projected. At the bottom the totals of the projected costs,
actual costs and difference of the two are given. The
maintenance of the personal budget as well as the decipherment
of the spending trends should provide you with an invaluable
tool to speed you towards financial success.

A personal budget set up in this manner can simplify the
process of setting a certain amount of ones' salary or profits
into a savings plan which is composed of simple interest
savings, mutual fund investments for your retirement and a long
range acquisition plan for real estate investment.

About The Author: Joe Kenny writes for the UK personal finance
sites http://www.ukpersonalloanstore.co.uk and also
http://www.cardguide.co.uk

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