Plan where you want your money to go, or you may not realize where it went!
Budget is not a bad word. It may remind people of diets or other things that make us deny what we want in favor of something that is less expensive or has fewer calories. Something not as fun as what we want.
But budgets, or the nicer term of Spending Plans, have a place in your life! How else can you plan what you’ll spend? A spending plan is a small step towards financial stability. It can help you create a habit of planning how you spend your hard-earned money instead of just winging it and hoping for the best each month.
Budgets are work though. You have to develop it, follow it, adjust it – and usually not by yourself. It will help you track expenses and income, and also help you record your spending. It may take a little discipline, especially at first, motivation, and sacrifice. But the end result could be priceless. How much is your financial security worth?
To get started:
- Set some goals. Do you want to spend less than your income or balance your income and expenses? Do you want to save up for something special? Do you want to automate everything you can to make it easy and less stressful?
- Next, write down all of your income, benefits, interest payments, etc.
- Now, total up your expenses. Make a list of what you spend money on each month – housing, cars, insurance, food, etc. Start with the fixed expenses – housing, loan payments, insurance. Next list flexible expenses such as food, transportation, gifts. Finally, make a list of those irregular or periodic expenses such as personal property tax, holidays & birthdays, income tax, etc. For those periodic expenses, divide the annual cost by 12 to arrive at a monthly cost.
- Hopefully, your income and expenses balance. If not, you may need to find ways to cut expenses or increase your income.
- Need something to help? You may need to Shape Up Your Spending.
Remember, small steps! Your budget will need some tweaking as you go along. While you're planning your budget, don't forget to sign up for Small Steps to Healthy Habits and take the "where you are now" survey. It will definitely help you as you make these small changes over time. Take the "where you are now" survey today!