How Personal Financial Budgets Solve Money Problems

Today’s money hack is related to money planning.

If you find yourself worrying about money problems, the best thing you can do is to sit down and make a simple personal financial budget to record your income, expenses and savings. You will know exactly where your money comes from and goes to, making it easier to control the flow and curb wastage.

Financial stress, financial worry, cope with financial stress

Remember that attempting to manage your money better without making a financial budget is like trying to swim without getting wet. And just as in swimming, it is never too early or too late to start taking control of your finances and begin saving (Source: Federal Trade Commission). So if you feel anxious about whether you’re earning enough, saving enough or spending your money sensibly, make a personal finance budget before you do anything else.

This is because the first step to financial independence involves understanding where your money comes from and where it goes, so you don’t end up wondering what happened to your paycheck at the end of the month. If you make a good financial budget, you will be aware of your financial position at all times without wondering whether or not you are saving enough or whether or not you can afford something presently or in the future.

So in essence, once you create a financial budget and update it regularly, you begin to gain control of your money, rather than having your money control you, which is why financial budgets are also known as money plans.

You may wonder how to make a personal financial budget, and the internet is here to help you. There are plenty of personal budgeting apps and software these days that do most of the calculations for you. You can even create a personal budgeting spreadsheet on your computer if you’re financially savvy, or get back to the basics with a simple pen and paper.

All a personal budget requires is a record of your income and expenses, so you can figure out how much you are spending, as explained on Dave Ramsey’s site, under the budgeting section. That’s a basic requirement, and if you really wish to understand your spending habits, you can go ahead and create a highly detailed budget that records a variety of expenses, incomes, investments, and so on. The possibilities in the world of personal financial budgets really are endless!

Related: Personal budgets and children.

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3 thoughts on “How Personal Financial Budgets Solve Money Problems

  1. HOW does one catch up from late bills from 4 months of unemployment and get current while also trying deal w normal but frustrating issues that come up EX: Car probs, and beating one self up after already paying all debt off for the 1st time going through the 2008 economy crash…
    Just to go backwards this past year. IT’S A VICIOUS CYCLE That I never thought I’d go through let alone twice?
    How long does credit take to go up if it’s 5 months of hard times? I’m only a number ? I’m stuck living in a townhome because I can’t rent a 1 bed to save BECAUSE bow my credit… help. 😦

    1. Hello Maddie, I’m sorry you’re going through such difficult times. I don’t know enough about your finances to give you solid advice but I can share some guidelines. The 2008 crash put a lot of folks in debt and if you had managed to climb out of that pit before your recent unemployment, you deserve a lot of kudos. Are you employed now? It can take years for your credit report to show substantial improvements, which is unfortunate. There are several ways to make sure the credit score goes up, such as paying your bills on time, but as you’ve mentioned, your financial situation is a bit tight at the moment. Try build up an emergency fund as soon as possible to prevent yourself from going into debt in the future when faced with unexpected issues, such as a car accident, etc. Of course, I would personally choose to repay my debts first because the outstanding amount will just keep growing with time. If you share your income and expenses with me via email, I may be able to guide you better regarding how to budget for your future months. In the meantime, be sure to check out the personal finance community on Reddit because you can get fantastic advice there once you share some figures from your monthly budget. Good luck!

  2. HOW does one catch up from late bills from 4 mintgs od unemployment and get current while also trying deal w normal but frustrating issues that come up EX: Car probs, and beating one self up after already paying all debt off for the 1st time going through the 2008 economy crash…
    Just to go backwards this past year. IT’S A VICIOUS CYCLE That I never thought I’d go through let alone twice?
    How long does credit take to go up if it’s 5 months of hard times? I’m only a number ? I’m stuck living in a townhom e because I can’t rent a 1 bed to save BECAUSE bow my credit… help

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