Know Your Budget

People seldom realize how important budgeting is when dealing with our revenues. Inevitably, the earlier a person learns to budget (and will strictly stick to it), the more he will be enjoying life. A budget helps you to determine the essential things to be spending your income on. Following a set budget can also save you from having endless debts…debts incurred from things that don't matter in the first place.

A home loan is a form of legal debt. So, is buying a house a form of guilty pleasure? Maybe…But one of the things that sets it apart from your usual credit card charges is the fact that spending on a house is a fundamental expenditure. It is a must for anybody to have his own dwelling place. The biggest monetary benefit of possessing a residence is the asset value of the house itself. Every payment decreases the principal total of your mortgage credit, plus the fact that you increase your stake of ownership of the house.

According to financial experts, below is a good way of dividing your net monthly income after tax. The main points to include in your budget are Housing, Transportation, Debt, Savings, and a category for miscellaneous expenses.

Yes, renting is an option. But having your own address is the BEST option. Including it in your budget will prove to be a rewarding choice sooner or later.

Limit spending up to 35% of your net income for Housing (mortgage or rent, utilities, insurance, realty taxes and home maintenance)

Limit spending up to 20% of your net income for Transportation (car payments, parking fees, auto insurance, gasoline, license, maintenance, auto detailing) S

Limit spending up to 15% of your net income paying for your Debts (installment payments, medical debts, credit cards, personal loans, tax debts, student loan repayments)

Allot at least 10% of your net income for Savings all through your working life

Limit spending up to 20% of your net income for miscellaneous expenses (food, groceries, outfits, amusement, child care, medical expenses, and charity)