If you are reading this, you’re most likely looking for a way to get control of your finances. Formulating and sticking to a monthly budget has always been one of the ideal methods to do this. Having a sound budget is important for managing your finances, one that has allowed me to live well even on limited funds. One of the most important things that I do every month is planning my monthly budget, and it has allowed me to systematically meet all expenditures, grow my savings, and eliminate debt.

I map out my budget for the upcoming month on about the 20th of the current month. This gives me a clearer view of my spending in the coming month. It’s not a good idea to prepare a budget after getting paid because, too often, that flush feeling of getting a paycheck leads to nonessential and spontaneous spending before the paycheck ever reaches the bank.

Start your personal budget by outlining all the things that must be paid that month like rent, electricity bills, insurance policies, loan repayments and telephone bills. The general idea is to apportion a budget for the things that I must pay to keep a adequate roof over my head and continue earning money. I like to pad these necessities to create “money back” after paying the bills and, if costs increase unexpectedly, I’m always covered.

Next, my budget is subjected to a list of discretionary things I need to cover but could live without if absolutely unavoidable. An example are monthly savings deposits, credit card repayments and donations. These things are also necessary, but in instance of emergency I could put them off for a short time. By giving credit card companies the maximum instead of the minimum, I keep my credit score high and my debt low.

My budget does not include the cost of food, clothing, or entertainment. These expenses get covered by what’s left over and that’s that. Some months involve lots of beans and rice, slow-cooker meals, free or cheap entertainment, and only one inexpensive piece of clothing . This strategy of handling my monthly budget has worked out very well over the long term as long as I honor it conscientiously.