Tips for Organizing an Effective but Frugal Home Budget

Making a frugal home budget is an art and to accomplish this art, one needs to have an insight to the capability of handling the finances.  Organizing a frugal budget will not only be helpful to maintain a stable financial situation, but it will also indicate your financial prudence for the near future.

Steps toward making a frugal home budget

There are certain small, but effective tips which will enable to you to make a frugal home budget.  They are as follows:

• Getting a clear idea of financial ability – It is the most important factor in making a frugal budget.  You should keep a close tab on your each single, whatever small it may be, income and keep it recorded on paper or in your computer.  Don’t ignore any amount if it is small.  Consult all the documents related to your income to make sure that you’re not overlooking any amount.  Similarly go through all of your expenses and all the necessary documents as your expense proof, so that you can enter every single amount to it.  To be precise, entering the correct information regarding your income and expenses will make your budgeting more accurate.  Some small expenses often remain unnoticed but at the end of the month prove to be a significant amount when summarized.  If you can grow the habit of jotting down your expenses, small or big on a piece of paper, and taking help of this record when listing your expenses, it will be great.  As a precaution, you should always use your take-home pay as your income, not the gross payment.  Because, you have to make your budget with the amount you have in your hand.  If you go with your gross pay as your income, you will be left with less amount of money to make budget, because taxes or other deductibles will be deducted beforehand.

• Listing your income and expenses – Here you have to make two columns, one for income and other for expenses.  You can take help of the spreadsheet in your computer or you can do it on a piece of paper.  But keep the paper so that you can keep a close eye on your budget every month and can use it for comparison purpose.

• Selection of variable and fixed entries – The bottom line of making a frugal budget is to maintain flexibility towards reducing an expense.  Every expense can’t be reduced.  Some of the expenses are fixed and others are variable.  If any change is needed to make, then only the variable expenses could be changed.  So it is important to select which expenses are variables and which are fixed and you can mark them in the list according to their nature.

• Making final calculation – Now it is time for calculating the total income and total income.  If there is any deficit, you have to choose some variable expense to reduce.  Even in the case there is no such deficit, then also having a glimpse at the expense list makes you think that where you should be more judicious, it will be rewarding if you take precaution before it becomes a burden.

Keeping a frugal home budget and maintaining it require one to be organized and disciplined in the sense of handling his own finance.  This requirement, at the end of the day, ends up with him being more and more financially organized. This is the key for achieving financial stability and meeting the goals even in today’s unstable financial condition.

Author’s Bio – Sam Payn is a reputed finance blogger who writes for online finance communities like easyfinance.com. He has a wide reader base on the web.

 Photo by: Hadesigns