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Want a Budget that Works?

There are some common errors that tend to trip up people trying to set up a budget that works. Some people are too aggressive, and don't remember the small items, while others continue to believe that the future will turn out differently from the present. However, there's no need to worry. If you follow the tips below, you can make up a budget that works and is easy to stick with. Keep reading! 1. Don't worry about each dollar It's true that some expenses will not be expected. Instead of being caught off guard by the, it pays to plan ahead and get a small budget that isn't allocated to anything in particular set up. Through this approach, you will be fine if every friend you know somehow happens to celebrate their birthdays the following month. You will also be all right if you decide you need a lot of mocha lattes, or if you have a must fix repair for your car. At the end of the month, if your everyday living fund isn't empty, you can buy something for yourself as a reward. 2. Focus on the must pay things first Before you start up that budget, make a list of everything you need to budget from, spanning the must have things to the areas where you can give and take a bit more. For example, you might make a list that has minimum loan payments and health insurance as unavoidable expenses; rent, groceries, and gas as somewhat flexible expenses; and entertainment, dining out, and fancy shoes as your flexible budget. Once your list is made, start funding the important and non negotiable things first, and continue from there. If you don't have enough money to make it all the way through the list, then you should get rid of the flexible items first. Making priorities in your list makes it easier to cut your spending without becoming overwhelmed. 3. Get that emergency fund going If you haven't set up an emergency fund yet, make your goal to save up quickly so you can get one. The goal should be to have a savings fund large enough to live off for the next 3 to 6 months in case you experience some kind of job loss or change in employment. An idiot fund, or a fund to cover you when you make the occasional big mistake, is also a good idea. You might still feel silly if you drop your phone in the toilet, but at least you won't need to worry about finding the funds to replace it. 4. Not everyone needs a "debt free first" approach A lot of folks make it a goal to get rid of their debt before they look at other financial issues. While this is a great approach for financial health in the long term, in the short term, you might just want to focus on making your minimum payments and throwing your money in a different area in some cases. For example, you might want to put off some extra payments until you set up an emergency fund, as that should be your first priority. 5. Be realistic about your plan Finally, if you have a lifestyle that is not congruent with your income, then you might have a lot of trouble sticking to a dramatic change in the way you spend and budget your money. In such a situation, you will probably be better off if you make gradual changes, such as slightly reducing your entertainment spending by 10% per month until you get to your goal. With some planning and a lot of determination, you can make your budget and stick to it.
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