Major Principle of Budgeting: Simple Ways to Successful Money Management

manage moneyManaging money is much more than just banking. It is about to keeping control of your daily expenses and finding ways to save for your goals.

Trying to live without making any budget is like trying to drive a vehicle without a steering wheel. You are always at risk of getting in the debt trap whenever you encounter a financial problem. That’s because your expenses tend to expand to match your income. Think of how you managed your last raise. Probably, you have incorporated it into your regular spending and have just forgotten how to live on less.

Is it necessary to have a budget?

Answering the following questions will help you understand how proactively you manage money. The more negative or vague your answers are, the more likely you need a budget.

  1. Do you know what it costs to live every month?
  2. Do you have an emergency fund?
  3. Do you often need to check your balance at bank to see the amount you have on your account?
  4. Are there any bills which make your surprised when they come?
  5. Where did you spend the last $100 you had taken out of a bank machine?
  6. Have you ever needed to resort to your credit card as you underestimated the amount of money you had in the bank?

When you are budgeting in your head, it is easy to just forget how much you have spent. Thus, you have always to guess how much you have left and this fact makes it tough to define the amount you can spend.

Start managing money

The following steps will help you to keep control of your cash management:

  • Keep a notebook in your pocket for the next two weeks and write down all the things you purchase and the amount you spent on those items.
  • Collect all the bills for the past several years and divide your expenses into categories. Add up the amount you spent in every category and divide the total sum by 24 to get your monthly expenses. Those are your current monthly expenses.
  • Make a list whenever you are going to the store for the next two months and think about your spending patterns the next time you make a purchase you didn’t have on your list.

Estimate your income

Once you have defined your expenses, it’s time to figure out your income – the amount you bring regularly, like salary, commissions, dividends, child support or pension, alimony, etc. Keep in mind that you income shouldn’t include the money you might get meaning that if you are not sure to get some bonus, don’t count it. So, just add the figures up and you will figure out your total monthly income.

To create the expenses side of the budget, make a table with four columns and label them in the following way:

Column 1. Expenses. List the categories of your expenses, like rent or mortgage, food, clothing, utilities, medical costs, emergency expenses, etc.
Column 2. Planned. List the amounts of money you are prepared to spend each month on every category of expense.
Column 3. Actual. Write in the actual amount you spent every month on each expense.
Column 4. Difference. If you didn’t spend as much as you though you would, it will be positive, if you spent more, it will be negative.


When your monthly expenses are much higher than you considered they would be or exceed your income, you are better to think about the ways to trim your expenses (or make more income). Revisions are a required part of any budgeting process.

Bear in mind that life can be very unpredictable, so your budget has to be flexible. Having some money saved for a rainy day can be very handy.

It is also useful to make monthly savings if you are planning to buy a car, for instance. Set aside a small amount every month and you’ll be astonished how far you ‘car fund’ can go.

Anyway, if you have somehow failed to properly manage your budget, keep in mind that is available 24/7 to provide fast and on-time assistance to help you get some extra money needed till your next payday.