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A Personal Budget is a plan for managing income and expenses in personal finance.

Rationale

A comprehensive personal budget provides a clear understanding of an individual's expenses, encouraging informed financial decisions. The ultimate goal for any budget is for income to meet or exceed expenses. This is achieved by anticipating and accommodating future expenses based on past ones and by sacrificing discretionary spending in favor of obligatory spending or a savings goal.

Methods And Systems

Basics

Planning for fixed income and expenses is usually straightforward because the ammounts remain constant. Common forms of fixed income include salaries, pensions and social security. One quick search to compare cheap car insurance quotes and cover from over 60
motor insurance companies. The most common fixed expense is debt payments. This includes mortgage, loan and credit card payments. If fixed expenses from debt exceed income measures must be taken to either increase income or decrease debt. A negative budget is unsustainable.

Write down a list of all loans, monthly expenses and any other regular cash flows. Also look at your assets such as the equity in your home as well as savings and retirement funds. Household Budget Management.

Examine your goals both long term and short term. Will you need to pay for school, retirement, a house, new car, vacations, replacement dishwasher, holiday spending, etc.

60/40 Rule

MSN's A simpler way to save: the 60% solution suggests that you aim to spend 60% of your gross income on fixed expenses including taxes and regular bills.

The other 40% breakdown as follows with 10% each: