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Preparing a budget is a great way to manage your personal finances. Many people feel that they may not need a budget; however having one will lead to greater financial stability no matter if you feel you do not make enough money to budget. Making a budget is a simple process to do and will only require a little time to make.

To begin, gather all your financial records, such as bank statements, bills, etc. This will allow you to get exact amounts of what you spend monthly. The fixed expenses are those bills and finances that do not change from month to month such as rent, mortgage, credit card bills, and so on. The variable expenses will be those amounts that change from month to month, such as gasoline, groceries, and other expenses that do not occur every month.

Next, record all of your income. For those who have a set pay check from week to week this is simple. Remember to include all the income you may receive including the income from dividends you may receive or other sources.

Now that you have all of your records and income at hand start a list of what you spend on a monthly basis. Remember to look at your financial records to make sure you write down every expense. This will help you analyze your budget better if you have everything written down.

Next, total both your monthly income and your monthly expenses. If your expenses are less than your income, you are doing an excellent job at budgeting. If the expenses are more than your income, your next step is to analyze your spending.

When analyzing your spending, you need to look at what you are spending this money on. If you find the bulk of your spending is contributed to dining out or frivolous things, then these aspects can be cut to make ends meet. There are numerous ways to lower some of your variable expenses; eating out can be counteracted by eating more at home, which may increase your grocery bill. However, there are numerous ways to cut this also, such as using coupons and buying sales items. If you find that you need even more cutting in your expense column, the fixed expenses are harder to cut. However, if you rent you may look into a roommate, which would allow other expenses, such as electric, cable and water to be reduced as well. For those who own their home, shopping around for a lower interest rate on your mortgage will also help lower some of the expense.

Once you have your budget in place, review it monthly. This will help you to analyze if your spending is getting better or worse, and will also give you a better idea of where you money is going. It will also help for you to figure out where you need improvement or if you are on track with your expenses.