Balancing Your Personal Finances Made Easy Part 1

Posted: 16 Jun 2008 | Categories: Personal Finance

In order to balance your personal finances and save money, you need to create a budget. This is the first step toward paying of your debt and saving for retirement. It leads to a future of financial security and peace of mind.

Approximately one half of your income should be used to pay for things you need. Experts disagree about the exact percentage, but it definitely should be no more than 60%. Write down all the areas that you NEED to spend money on each month from your personal finances. This includes food, gas, house/apartment payments, etc. Make sure you are honest and include only things absolutely necessary. (Do not include credit card debt or other debt here; they will come later.) Then write down how much you are paying for each of your needs that you listed. Take the total amount you are spending on your needs and divide that number by your total income so that you can see what percentage of your income goes for your needs each month. For example, if you make $2,000 a month, and spend $1,350 on your needs, you divide $1,350 by $2,000. This equals 0.675, or 68% of your income. If the amount you are spending on your needs is much over half of your income, as in this example, you are going to have to look for ways to save money on your needs.

Re-shopping your insurance: auto, renters/home, health, life, motorcycle, etc are some of the ways to save money on your needs. It’s important to re-shop insurance every 18 months to two years to make sure you are still getting the best deal. If you have an overwhelming car payment, you may have to sell your car. Maybe the expense most out of control is your housing. Try renting one of the rooms in your house out, staying with a family member for a while, or moving to a more affordable place. Get creative, and find ways to save money on your needs, so that approximately one half of your income is spent here.

Take the time today to find out what percentage of your income you are spending on your needs. Then, look for ways to save money on them in order to begin balancing your personal finances. Look for my next article to balance the second part of your finances.

Gina Clark writes on financial issues. Click here to learn additional ways to save money and manage your personal finances.

Article Author :Gina_E_Clark

The Standard & Poor’s Guide to Personal Finance

Commonsense strategies for improving your personal cash flow and building long-term wealthThe best person to straighten out your financial house is you, and the best time to start is right now. The Standard & Poor’s Guide to Personal Finance provides you with step-by-step guidelines for making the right decisions on everything from insurance and investments to credit cards, college and retirement savings plans, and other important day-to-day money issues.Combining real-world examples and insights with Standard & Poor’s knowledge and expertise, this bottomline book tells you everything you need to know to: Manage your good debt and eliminate your bad debt forever Create and easily follow an innovative, two-step budgeting process Control stock market risk through asset allocation and dollar cost averaging Ensure that 401(k)s, IRAs, and other retirement plans will meet your needs Build a substantial, tax-advantaged college savings plan Leave your estate to your heirs instead of the IRS Minimize your short- and long-term mortgage costs Get the insurance you need without spending a fortune Your ability to manage money wisely can have a dramatic effect on your personal and financial success. The Standard & Poor’s Guide to Personal Finance contains scores of skill-building tips and guidelines, and provides you with the tools you need to make every financial decision a smart, profitable financial decision.

Smart Guide to Managing Personal Finance

Smart Tips on setting up a realistic budget that works for your individual circumstancesSmart Ways to stick to your budget, establish savings, invest wisely, and develop good creditSmart Advice on overcoming previous credit problems, choosing the right bank, and finding a trustworthy broker or accountant Smart Advice on the most effective ways to take control, plan ahead, and stop living paycheck to paycheck Smart Tips for getting the best rates on credit cards, buying or leasing a car, and purchasing a home Smart Insights on maximizing your health and life insurance benefits, reducing your taxes, and ensuring that your estate goes to your heirs rather than to the government Quick reading and easy referencing with a comprehensive index and loads of sidebars and tablesAlfred and Emily Glossbrenner have written more than fifty books together, including Online Resources for Business and Making More Money on the Internet. They live in Bucks County, Pennsylvania.
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