If you’re reading this article, you are probably interested in looking for ways to moderate your finances. The best way to do this is to create a monthly budget and committing to it. A sound budget is a fundamental tool for managing money, one that has allowed me to live well even on limited funds. One of the most critical things that I do every month is outlining my monthly budget, and it has allowed me to consistently meet all expenses, grow my savings, and control debt.

I map out my budget for the coming month close to the end of the month. This will prepare me with my expenses in the coming month. It’s not a good idea to develop a budget after getting paid because, too often, that flush feeling of receiving a paycheck results to uneccessary and impulsive spending before the paycheck ever reaches the bank.

Managing my personal budget includes outlining all the things that must be paid that month like mortgage/rent, utility bills, and other necessities like insurance, car loan repayment, transportation costs, and phone. These are the crucial things that I must pay to keep a comfortable roof over my head. I like to pad these requirements to make “money back” after paying the bills and, if costs increase circumstantially, 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 unavoidable. For example, donations, credit card repayments and monthly sving deposits. These things are also important, but in instance of emergency I could put them off for a short time. By paying 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 food, clothing, or entertainment. Ultimately, these items get covered by what’s left in the budget. 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 managing my monthly budget has worked out very well over the long term as long as I observe it religiously.