Payday loan is a type of loan that can be acquired quickly and easily. It provides everyone who has a job to borrow small amount of money to finance emergency and unexpected bills, car repairs, tuition fee, and grocery. Payday loan lets you have the money you need to survive until the next paycheck arrives. But if payday loan is available to virtually anyone, does it mean that anyone who fell short of cash before the next payday should use this service? Knowing that there are companies willing to lend you money when in dire emergency is good news but there is nothing better than a well-planned household budget.
Budgeting is very important. It puts you and your household expenses into the right perspective. It puts you on track of your financial obligations which in turn, provide you with the knowledge of your actual financial standing in the future. Budgeting makes you more responsible in handling your money. It prevents you from over spending and keeps you from borrowing money.
How to plan your budget?
Okay, budgeting is a headache but this headache, no matter how intense should be injured at all times. If not, you will end up short of cash before your next paycheck arrives. You see, many households that fail in planning their budget are spending more than they should have. In other words, they buy from money they don't have. Some still fail even if they have a good budget because they do not follow it. So, this is where you should begin. Know how much money you have, know where it all goes, and follow your budget strictly as if your life depends on it.
The best way to plan your budget is to list down all your sources of income and where all your money goes.
First, list down your income: your wages, bonuses, investment income, incentives, miscellaneous income, and every amount that comes in for one month. Take the total. Then, deduct from your total income all the taxes you pay from local and state income tax, Medicare tax, social security tax, federal tax, etc.
Second, list down all your expenses: fixed and flexible. Fixed expenses are those that remain constant each month. They are home, utilities, health and medical, investment and savings, and transportation expenses. Flexible expenses include food, entertainment and recreation, clothing, debt payments, pet (if there is any), and miscellaneous. The data may seem to be overwhelming but in order to plan your budget effectively you have to go through all these. Being able to know how much you spend from each of these will help you plan out your budget well.
Now, list down your home expenses. How much do you pay for rent or mortgage? How much do you pay for home improvements, home repairs, home maintenance, Homeowners Association dues, property tax, and homeowners insurance? All of these should be listed and should be accounted.
Compute your monthly utility bills: water and sewer, electricity, cable subscription, telephone (cell phone and land line) and internet. For transportation, compute your car maintenance, auto insurance, car payment, gasoline, tolls, taxis, subway, and bus expenses.
List down your medical or dental insurance and fitness fees. Investments and savings include college fund, bonds, stocks, mutual funds, 401K or IRA, emergency fund, and savings.
Since these are fixed expenses, you should be able to deduct them from your monthly income immediately. The amount that is left will be allocated to the remaining obligations including food (groceries and dinning out), clothing, pets (dog grooming, vet, and boarding), and miscellaneous including gifts, household products, toiletries, etc.
After doing these, you will see how much you spend against how much you earn. Here you will know if you are spending too much or less. If you spend too much, make some adjustments so that you only limit your expenses to what you earn, or less. The key to successful budgeting is allocating the right portion of your money for each financial obligation within the walls of your monthly income. Spending beyond your budget will put you into a great financial problem so make sure that you plan your budget properly and stick to it all the time.