All of us want to conserve the salary we earn and spend it efficiently. This is justified since it is our hard-earned money that we want to put to the best use. An effective tool for streamlining your expenses and managing your money is a budget. A properly executed budget can help you locate your cash flow and put every single dollar you earn into good use. It will also help you save up for the future.

The first step to creating an effective budget is an age old secret – setting a proper goal. Decide what you want to get at the end of the month. Make up your mind if you want to make one big purchase for the month or spend the salary exactly in bill payments. This way, you will be able to give a definite shape to your budget.

As a second measure, jot down the way in which your cash flows. This note must include all your bills including regular expenses like grocery, major expenses like health-care etc. It must also include miscellaneous purchases. Once this list is ready, you will know how you have spent your cash. By carefully analyzing this list, you can also find out a horde of things you can avoid purchasing. Cut down on these miscellaneous expenses. Make a list of how much you spend on each item. e.g a purchase of just 3 dollars a day can translate to around $1300 a year. Avoid expensive latte or printed newspapers and put the amount in a box instead. At the end of the month, you will be stunned by the amount you have effectively saved. This new expense list will be significantly lesser than the older lists. This way, you can save a lot.

Debt by itself constitutes a vicious circle. You have to constantly repay the original and also pay huge interests. The best way out of this is to probably pay the minimum amount to be paid in all debts so that you avoid late payment. Whenever you have excess cash, pay off your biggest debt. Thus you don’t run into trouble with overdue debts. And also the bigger debts often produce greater interests . So you will be free of that burden too. This simple method is so effective that it is sure to startle you in a pleasant way when you get over your debts.

The last step, but probably the most important one is to make a note of the amount of money you earn and spend. For this, a computerized worksheet/database software will com in handy. Formulate your own system in a way that is convenient to track your monthly budgeting system.

Abhishek Agarwal