How to Create a Budget

By: Andi Wize

We all need help once-in-a-while. We're not only referring to personal matters. We're talking about financial matters. We reach a point where we have to buy something out of necessity, but we can't pay in full just yet. An example of this is a home. 

Creating a Budget
Now the time has come for you to repay on what you own. To create your budget, you need to create a plan. Follow these steps below on how to create a budget. 

1) How to Create a Budget #1
Prioritize which of the debts must be paid first.

Prioritize your bills. Make a list so it would be more organized because you could see it right in front of you. This is what you call establishing goals. Establish first what must be prioritized over those you could schedule paying some other time.

Focus on the essential expenses
These are debts or expenses that should be on top of your list.

  • Rent or mortgage.
    Of course, who in his right mind won't pay up as soon as possible. Paying your rent or mortgage bills on time helps you have a roof over your head. 
  • Child support
    If you don't pay on time, there's a possibility you can be held behind bars.
  • Utility bills
    As much as possible, set aside a budget on gas, heating, water, electricity or telephone when you get your paycheck. In doing so, when the bill comes, then you have something prepared.
  • Car payments
    This also includes car maintenance.
  • Other secured loans
    If you don't repay collaterals, the creditor takes the property even without court interference. 

2How to Create a Budget #2
Work on The Non-Essential Expenses

Technicaly, these expenses don't have an immediate side effect if you dont pay them. It's a desired goal but not really a priority. The only concern that can be considered when you don't pay non-essentials debts for a long period of time is the negative image it could project on your credit report. 

  • Department store and gasoline charges.
    Failure to pay these charges may result in losing credit card privileges. If it's too large, you might be sued.
  • Loans from friends and relatives.
    Morally speaking, there is an obligation to pay but sometimes since they're family, we think that they will understand if we can't. Check with them if you can delay the payment and ask them for how long.
  • Newspaper and magazine subscriptions. Little by little, if you haven't paid, they'll amount to so much. 
  • Legal and accounting bills. If these remain unpaid after a long period of time, then that's when you might be sued. 
  • Other unsecured loans. In unsecured loans, there's no collateral for the debt. This means that the creditor can sue and then collect the debt. 

3) How to Create a Budget #3
Work on The border bills

Some of the bills border between essential and non-essential. If you let these bills defer for a long period of time, it could have consequences in your personal life.

  • Auto insurance.
    The consequence in some states is losing your driver's license.
  • Medical insurance of bills.
    If you have a tainted record, you might have a hard time getting new insurance in the future.
  • Credit and charge cards. If you don't pay your bills on time, you might lose your credit privileges and would have a hard time applying for a new credit card. 

4) How to Create a Budget #4
Creating and Sticking to Your Time Frame

Now that we laid out the groundwork on how to create a budget and which to prioritize, lets move on to having a time frame.

  • It's best that you have a calendar in front of you.
    Mark the dates wherein you would have to pay the specific debt - be it essential or non-essential. Then what you can do is set aside the bill that is allotted for that debt. 
  • As for the budget, prevention is always better than cure.
    You know how much you get in a month. That being in mind, you must allot how much percentage of your salary shall go to which. Then do your best to stick to that budget. 
  • If this is how much you should spend for leisure, then that's how much you should spend for leisure. If at any point, it goes overboard, then there would have to be a sacrifice on another aspect, such as food. 

When creating a budget, you must also list down which is number one for you. Have the discipline to stick to your priority and your time frame. If you succeeded, paying the bills won't be any problem. Good luch

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