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If you have decided it's time to set a monthly budget (and stick to it!) then good for you. This is the first step in getting your finances in order and actually saving up for the future. Setting a monthly budget is all about sitting down and going over all your earnings and your expenses with a fine tooth comb. Set aside a few hours this week to set a monthly budget that you can stick to.

The Basics of Budgeting

Budgeting is all about seeing how much you earn and how much you spend. Your goal is to spend less than what you earn. If you break even, great! If you save a little each month, this is even better! However, you need to think about each and every dollar you spend each day and each week. This includes big items like groceries and fuel as well as bills such as your rent, your electricity, your water, your cell phone, your internet and your cable. It also includes minor purchases such as a case of beer on Friday, a meal out with your friends on Saturday, movie rentals on Sunday, etc.

Even minor things like a coffee once a week, a chocolate bar at break time and a pack of cigarettes will add up. You should also include things like pet food, cleaning products, gym membership fees and clothing and miscellaneous that you will buy once and a while. You may not buy shoes every month but you may buy one article of clothing per month. This all needs to be put on the budget.

Budgeting Success Tips

It can be hard to set a monthly budget. Money is usually stretched pretty tightly and, with all the loans, the bills and the weekly spending, you may not have anything left over. This becomes a big problem when something unexpected happens.

You need to prepare for emergencies, unexpected events or things that may go wrong during the week such as a car accident or home break in. You may budget for 20 dollars per week on fuel; however, if you may need to make an emergency drive down the coast to pick up an abandoned friend which will cost an extra 40 dollars. You may budget for 100 per week in groceries; however, you have friends coming for dinner on Wednesday and your daughter got sick with the flu, meaning you needed to spent an extra 20 dollars on cough and cold medicine and have run out of food by Friday. These things happen. Setting a monthly budget is all about working around these things by planning and preparing for anything.

Make sure you include an emergency fund or miscellaneous column on your monthly budget. If the fridge breaks, if you need a new computer, if three of your friends have birthdays in the same month, if you experience an illness, if your car needs a new tire - all of these things will cost money and if your budget is stretched too tight, then you are looking at going into the red.

Allow for $100 per week for emergencies if you can. If you do not spend this money each week, which you most likely won't, then you will have a nice little savings account established. After three months, if nothing goes wrong, you suddenly have $1200 saved up. Keep in mind, however, that it may be tempting to spend this money on a holiday or something else, but the moment you do will also be the moment you need the money for an unexpected cost. Setting a monthly budget is all about continuing to save and prepare for anything.

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