Like eating too much can lead to obesity, spending too much can lead to debts.

Always avoid running out of money because expenses arrive even faster than money does. So to avoid pitfalls of you have a personal budget. Know your expenses and the key is to always spend within your means. A good monthly budget can ensure you pay your pills in time, have funds to cover unexpected emergencies and reach financial goal.

Add your income:

The first step of this monthly budget is to determine how much income you have. Include all sources of income such as your salary, interest, pension and other income that is your spouse’s income if you are married and have a shared account type thing.

When you get your salary, be sure to first pay the taxes. Because if taxes are not taken out automatically, remember to include them as your another expense. If you are receiving money from anywhere, than list it along with the amount in your income.

Minimize expense and maximise savings:

The ultimate goal of personal budgeting is to minimise expenses and maximise savings. By cutting short on needless spending and essentially getting bigger in savings you can invest the extra money on other major financial goals that you have to do in future. Take for a example if you are an married man and have two daughters, you must save enough to have two great weddings and marry them off. Saving for your children’s education is a lot now days. The master’s degree nearly cost 14-18 lakhs depending upon the university. Or saving for a big thing like getting a new house or a car or paying off loans.

Where do you spent:

Keep track of where your money is going and how much you spend for a month. This worksheet helps you figure out what are the fixed expenses and which are the flexible ones. Fixed expenses are the ones that do not change from month to month. They includes all your bills like rent, electricity, insurance payments your expenses in grocery or household items. Flexible expenses are those that can change from month to month. It includes your entertainment budget like how much you go out for food, movies, trips etc. Keeping a ordered list helps you maintain your budget.

You save the difference:

You already know how much your income is and you make a list of where your money goes. Simply subtract both. The difference if a positive number it means you are spending less than you earn and it’s a thumbs up! But a negative number indicates that you have to narrow down your expenses. Cut short from places where you think you put too money unnecessarily.

Stick to it:

The important and next thing that you should do after listing your budget is to stick to it. Practise makes a man perfect. With each passing month you learn how to save or learn from your mistakes. And in a few times you will find the balance that works wonders for you.