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How to Save Money and Get Out of Debt by Keeping a Good Budget

As they say, failing to plan means you are planning to fail. This applies as well to personal budgeting. It is good to keep in mind the What is NEO Blockchain aspect as well, because many people are making good money there!

First, if you do not have the habit of taking stock or tracking your finance, it will be good to start. If your finance is tied to other people (eg your family members), it is important to agree with them also that they need to help you to track information as well.

Instead of using a pen-and-paper method as some people do, I strongly encourage using the computer the track. With a computer, you can easily search for information and generate reports, and keep a history. A cheap way to do this is to open up an excel sheet to start tracking your information (eg using google's free apps).

A better way is to invest in one of the financial applications for home user. These usually contain a host of features that you would find useful. Each person's preference may differ, so try out a few until you are comfortable with one.

Look for features like:

• Types of account it can track (eg cash, different kinds of bank accounts, credit card, line of credit, investment, asset, liability)
• Direct download or import functions from banks (esp for USA, but if you are like me, my local banks don't offer this)
• Types of reports it can generate and customizability
• Alerts when you overspend the defined threshold of a category
• Investment tracking (eg stock prices, calculation of profits)

Budgetting function (and ability to use historical data for auto-budget)

As a start, setup the application with all the accounts that you have, assets, as well as liabilities. Also enter the recurring bills and deposits/income. This will give you a good baseline for net worth.

Next, establish the discipline to record your expense and income transactions, so you always have the latest picture of your financial health. To reduce the chore of recording every single nitty-gritty detail, you could stapler common receipts together so that you could combine and record them at a later time. The main idea is to keep information of how you spend your money, and what income you get.

The level of detail (granularity) can vary from person-to-person, so just decide how much detail you want to go before it all becomes too tedious. It is better to record on a very 'rough' level, rather than to record very detailed transactions and eventually lose the interest and give up.

Once you have enough information recorded (say over 3 months, but ideally over a year), the reports will come in handy. Generate a report of your Income vs Expense, on a category level (eg dining, groceries, insurance, transport). From the net balance, you can see whether you are in the black or red (saving or overspending).

From here, you will see why it is important to keep data! This is partially for self-awareness, and partially for self-motivation! People who don't do book-keeping, often have no idea how much money they are spending (and on what items). Some of these information may surprise you! You may be shocked at the amount of money you spent on a cup of Latte every day.

From these information, you can now generate a budget. Put in realistic figures of how much you want to spend on basic necessities like food and groceries, electricity and water, transportation and insurance etc. Next comes luxury items or those things that are 'good to have'. If your goal is to increase your savings, think long and hard about reducing those luxury items. Going back to that cup of Latte, perhaps you can drink instant coffee and save $4 every other day, instead of drinking every day. Likewise, it is alright to indulge every now and then, but you probably don't 'need' to buy the latest gadget that comes to market unless you're extremely rich.

Next into the budget will be those recurring items. If you have an item that occurs only once, say in the future, you could divide it by 12 so that you factor it in a monthly format. Alternatively, you may want to keep it exactly in the month that it should occur if you are doing a annual budget - so that you know exactly how your cash flow will be like, each month.

Finally put in your income, or estimations of it - including salary, claims, dividends, gifts.