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Budgeting | XL Financial Blog

How Budgeting Can Help Keep Personal Finances On Track

Posted on 09. Jul, 2013 by in Financial Planning

Keeping personal finances in order can be very challenging for individuals, couples, and families. Many people use budgeting as a tool to help keep spending and savings on track. By creating a realistic budget and sticking with it, it is much easier to meet financial goals, build up an emergency fund, and still afford life’s little luxuries.

The first step to setting down a budget is to figure out how much money is coming in. Next, all of the expenses should be listed, as these are the areas that money will be going out to each month. There are many software programs available today that make the process of creating a budget very simple. All a person needs to do is input the numbers, and the software calculates the rest.

Expenses are generally broken down on a monthly basis. They may fall under the category of fixed expenses, which includes rent,  mortgage, health insurance, car insurance, and more. Fixed expenses are ones that cannot be changed, simply because they are essential.

Expenses that are variable can often be altered, if needed. Variable expenses would include things like dining out, entertainment, and shopping. When looking to trim items from a budget, the variable expenses category is the best place to start.

Budgets are a great way to get finances organized and stay on top of income and spending. It is important to continually track spending and check up on the budget. Budgeting is a smart and simple way to know exactly where money is going each month.

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