If you are reading this, you’re probably looking for a way to have control of your finances. The best way to do this is to create a monthly budget and sticking to it. A sound budget is an essential tool for managing money, one that has allowed me to get on with my day to day life even on limited funds. One of the most crucial things that I do every month is managing my monthly budget, and it has allowed me to consistently meet all expenses, grow my savings, and eliminate debt.

I normally plan my budget for the upcoming month towards the end of the month. This will prepare me of what’s down the road. It’s not a good idea to prepare a budget after getting paid because, too often, that flush feeling of receiving a paycheck leads to unessential and impulsive spending before the paycheck ever reaches the bank.

Managing my personal budget includes listing all the things that must be paid that month like mortgage/rent, utility bills, and other essentials like insurance, car loan repayment, transportation costs, and phone. The main idea is to allocate a budget for the things that I must pay to keep a adequate roof over my head and continue earning money. I like to pad these requirements to create “money back” after paying the bills and, if costs increase unexpectedly, I’m always covered.

Next, my budget is subjected to a list of discretionary things I need to cover but could live without if absolutely needed. These items include monthly savings deposits, credit card repayments, and donations to charity. These things are also important, but in case of emergency I could put them off for a short time. By giving credit card companies the maximum instead of the minimum, I keep my credit score high and my debt low.

My budget will not include the cost of living such as food and entertainment. These things get covered by what’s left over and that’s that. Some months involve lots of beans and rice, slow-cooker meals, free or cheap entertainment, and only one inexpensive piece of clothing . This strategy of handling my monthly budget has worked out very well over the long term as long as I observe it religiously.