Budget Building 101
Building Your……….No Don’t Say It……….Budget or Two
Don’t just build One Budget – Build Two
1. Have 3 bank accounts. Make sure they have low service charges. If you plan it right only your Bill account will charge you service charges allowing you to properly budget for minimal cost. 1 will have numerous (over 10) debits per month, 1 will have a many (10ish) and 1 will only have a few.
The 1st account we will call the Bill account. All fixed items come from this account and get set up for direct withdrawl where possible. Auto withdrawl takes the payment on the due date allowing you to keep your funds until they are due – but not over due. The Bill account consists of – rent/mortgage, electricity, heat, telephone, cable, internet, cell phone, gym fees, car lease/loan payment, all insurances, etc. Some are approximates like electricity and heat and you should try to pick a budget amount that is reasonable. If it is paid monthly it should be added to the Bill account budget. Once you have determined your fixed payments per month you will add that amount (bi-weekly or monthly) to the Bill account and leave it to pay the bills. Take a good look at this list of items and you will see what you could stop doing or paying for to save some money.
The 2nd account is called the Spending account. This is the account that you put your money for food, gas, movies, restaurants, bars, beer, smokes, taxis, babysitters, clothing, nails, hair etc. Anything that is not a fixed bill is taken from this account. If you are trying to live on a fixed budget this double account method is perfect. One account for bills and one for spending – when the spending money is gone the ABM card gets put away. Once you have alloted yourself a spending budget amount try paring it down by $50. or $100 or can you spend $200 less? This is a great way to see where your money is really going.
The 3rd account is called the Savings account. This is where you put any money that is 100% earmarked as SAVINGS and you close the DOOR. Yes, control yourself the exercise here is to save some money so follow along and we will have a pattern happening before you know it. This is your only account with a closed door.
If you budget your pay cheque into the 2 different bank accounts – Bills and Spending – you will start to see some that you will have some left over from either accounts to go to the Savings account
Bill account is “other” on your ABM card
Spending account is “chequing” on your ABM card
Savings account is “savings” on your ABM card
Do not ever withdrawl from your “other” account or you will NOT have enough to pay for your bills- NSF fees are too expensive and we are trying to save here. Do not ever give yourself a loan from this account – you are stealing from yourself.
If you can get a handle on these 3 accounts you will find you are much more financially organized.
Michelle has been a banker for 10 years but more an avid Mexico traveler. See more stories and tips at www.chemuyilproperty.com
Article Source:http://www.articlesbase.com/personal-finance-articles/budget-building-101-982023.html
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