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Creating a Budget After Moving Out for the First Time
|You've moved out on your own for the very first time (after determining you could afford a new living situation) and don't want to put yourself financially in debt. What's an independent individual to do? Answer: create a monthly budget that won't have you at risk of putting yourself in the red.
Making a monthly budget
It's important to create a budget and stick to it so you don't end up driving yourself into financial ruin and damaging your credit score. The very first step in the creation of this budget is to determine how much money you bring in each month after taxes, also known as your net income.
Once you know your income--which you can easily calculate by tallying up your monthly paychecks--it's time to write down a list of your recurring monthly expenses.
Determining your expenses
Rent or mortgage payments are a given, but there are also other expenses to consider when totalling how much money you will require to pay bills and survive each month. This will be especially easy if you moved into your new home or rental in the past month and already have a general idea of what your month to month expenses are.
Some expenses to add up while creating your budget include but are not limited to...
Common recurring monthly bills:
Other living expenses:
- Loans - car, school, personal
- Cell phone bill
- Credit card bill(s)
- Insurance (medical, dental, car, tenant insurance, homeowner's insurance)
- Cleaning supplies
- Gas, car maintenance and/or other transportation costs such as public transport
- Not as recurring cost of living expenses - haircuts, doctor's visits, gifts
- Possible emergency expenses - parking tickets, hospital visits, auto repairs
Sticking to your budget
After you have determined how much money you make each month and how much needs to be set aside for your monthly expenses, the most important step is to actually keep to this budget and not live outside your means. This will take some discipline and sacrifice, but it is possible, even if it means cooking for yourself rather than eating out 24/7.
TIP: To avoid living paycheck to paycheck, give yourself a little buffer room and don't spend all of your remaining cash each month. It's more than okay to have excess money in your checking account.
Don't forget to save
While your tendency may be to spend what money you have remaining on so-called unnecessary items like going out to eat or spending a night on the town (see above), it's important to put a little money into your savings account out of each paycheck. Even if it's only $25 or $50 set aside into your savings account, the money will add up.
This money can be used in case of emergency, to treat yourself or to save up for that eventual retirement, but regardless of the reasoning it will be there should you require it.
Adjust when necessary
Test out your budget for a month and see how things go. If changes are required (for example, there's not enough leftover cash or an added expense occurs) adjust your budget accordingly. While it's important to remain on top of your budget, it's also okay to be flexible.
Author : Cassandra Rose
on October 31, 2014
TopMoving.ca - Moving Expert