Making a budget was something that many of us had to do in our high school economics class. Having done it once, few of us relish the thought of ever making a budget again. For some it’s a simply tedious activity while for others it’s a constant reminder of how little money they have in relation to their financial obligations. As painful as it may be at times, making a budget (and sticking to it) is the first step towards getting control of your finances. How can you get started?
- Note down all of your expenses – even the little ones – for an entire month. This will let you know where your money is going and will let you plug any “leaks” in your wallet.
- Divide the expenses into categories(transportation, food, entertainment, etc.) and then write everything down. While there are apps and software to help you, the best place to start is simply a sheet of paper with two columns: “money in” and “money out”. CNN has posted some great tips on making a budget.
- Once you have a clear idea of how much you are spending,identify which expenses can be reduced without lowering the quality of your life. For example, if you are paying $150 per month for cable and internet, but a rival provider in your area only charges $75 for the exact same service, then switching providers would reduce your monthly expenses without making your life less enjoyable.
- Use the freed up money wisely. How should you spend that recently liberated money? On these two things:
Making a budget is what grown-ups do. We may not like it, but with a little practice we can make and stick to a budget that will nudge us a little closer to our goals each month. In fact, it can help us to determine how many investments we should set up!
To your success…