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How to create a sustainable monthly budget

Health & Science
 Budgets help discipline your approach to finances (Shutterstock)

Coming up with a budget is important as it empowers you to know how to track your money.

Irrespective of your financial knowledge, it is key that you're aware of what gets in and what gets out to prevent you from financial woes.

Budgets are also ways to discipline your approach to finances, whether it's the use of cash, or credit cards.

Here are some ways to make the monthly budget sustainable.

Know how much you have

You need to begin from a point of knowing your finances and where they stand. Checking how much you have will likely help you identify whether you can afford certain items or may require a loan.

It helps to project for you your payment plan in the case you require credit. Part of knowing what you have is by checking the interest rates and expenses of your bank accounts.

Know who and what you owe

To create a good budget, keep track of your credit score. This allows you to anticipate any deductions that may come your way from your creditors. With a record of this, it is possible to delay other items that need your financial attention until you can actually afford them. 

Ensure that you know what your monthly recurring debt payments are. Get to calculate the total amount owed on each debt account and the minimum monthly payment you should make.

Determine your net worth

Determine your net worth by subtracting what you owe from what you have. You will be keen to realize whether you have a negative or positive or low net worth. Such a figure opens your eyes to understanding what you need to do to achieve a certain financial goal.

Check your expenses

You need to determine what you spend your finances on. This helps you to actually note and see whether you are making unnecessary purchases.

A budget reflects to you your spending and helps you know if you are surpassing it or staying within the right margin. You'll also be aware of the things you can do without.

Get a spreadsheet for your financial information

Putting this on a spreadsheet is not only good for record keeping but also so that you are able to adjust it accordingly, if need be. In the long run, you're able to see the whole projection fully.

Stay disciplined

Creating a budget without being disciplined is a total waste of time. You'll actually be doing yourself much harm since you won't be able to track your finances.

Avoid going past your limits especially when it comes to using credit cards. This will cushion you from excess debt and make it easier for you to pay them up.

Coming up with a budget isn't hard, it requires you to be open to yourself and enjoy the freedom you experience when you're in charge of your financial situation.

What are you most likely very wrong about?


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