Essay on Useful Skills: Creating a Budget

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Creating a budget is a skill that creates savings and keeps you out of debt. A budget starts out as a snapshot of your current monetary affairs. Your current income streams and their sources, your bills and saving needs and any other pertinent information all go into it. From there you can see how to best direct your flows for the most effective use of your money.

To start your budget you need two pieces of information. You need a list of your incomes and a list of your expenses. Most income comes from your employment and any savings or investments. Some people will also have income from property. Other sources of income may include Social Security, alimony and child support, insurance settlements, trust funds and inheritances and some
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Some people simply take on a part time job for additional funds. Others choose to simply cut their expenses.

Try to reduce variable spending and lower your fixed costs. For example, buy store brands instead of name brands and bike or use public transportation instead of taking short trips by car. Consider getting rid of extra autos as well. You can lower your utility bills by dropping cable TV and weatherizing your home. Always try to spend within your means.

Reducing your overall debt is the final step in creating a good working budget. Many people who battle with heavy debt have a hard time monitoring their cash flow. They have trouble sticking to their budget and struggle to control spending. Until they get their debts under control they will not be able to achieve their financial goals. The biggest key to financial health is to stop creating new debt atop the old debt.

Credit card spending is paramount to getting debt under control. Each new purchase adds to the already existing debt. Stop using your card and stopping adding to your debt. Instead, you start to make progress on your debt and pay off what you owe. Start with the debt with the highest interest rates. After each card is paid off simply stop using it so that your debt doesn't increase again. If you can, stop using all credit cards entirely. If you cannot stop using credit cards be sure to always pay more
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