Many people know they should track their spending and create a budget or
spending plan but don’t want to. The
thought of knowing how much money you actually owe, how much money you earn and
how much money you actually spend each month is terrifying. If you create a budget you will quickly see
how you spend your money. You won’t be
able to hide it or run from it any longer.
If you know, other people may know too, yes those other people are your
creditors who continue to call asking for a payment. Learn more at http://tiny.cc/kbnmpy
Many people are fearful of creating a budget and have good intentions by
creating one but don’t stick to it. To
stick to creating a budget you have to view a budget as a tool to help you. You are the only one who has to see your
budget. Many people today live paycheck
to paycheck and are in mounds of debt, in some cases because they didn’t create
a budget or didn’t stick to it.
If you know how much you earn, how much money you owe and how much money
you spend you can change the direction of your life. A budget helps you if you have an unexpected
expense and when an economic change occurs such as tax code change. In 2017 the country experienced several fires, hurricanes, floods and
earthquakes some in areas that were not expected. If you did not have homeowner’s insurance to
cover the damages that is example of unexpected expense.
Create a budget by writing down everything you spend money on each week or
during each month and subtract your income.
If the result is less than 10% of your monthly income you need to make
some adjustments to your spending. A
balanced budget consists of: 15% transportation, 15% debt, 10% savings, 35%
housing and 25% other expenses.
Create an emergency fund to cover your total monthly expenses for 9-12
months. Creating a budget will help you
to reduce spending and prevent you from using credit cards to pay for
purchases. Use credit cards for
emergencies only.
Develop financial goals when
creating your budget. Financial goals provide motivation for you to work
towards reaching that goal and provides a sense of accomplishment when the goal
is met. Some examples of financial goals are: pay off a credit card, buy a
home, start a business, take a vacation, etc.
Here are 6 ways to create a budget and stick to it.
- Take accountability. Take accountability for your actions, don’t blame others for your current situation. Learn how to be flexible and adjust to changes in your life.
- Use pen and paper, use a software tool like Quicken or Microsoft Money or use the envelope method. Once you visually see where you are spending your money it will make it easier to reduce spending.
- Create goals. Write down a list of at least 5 financial goals. If you cannot achieve any or can only achieve 1 or 2 of your financial goals you need to make some changes in your spending habits. Write down a list of all of your debts. Develop an action plan and beside each debt write down steps on how you can pay the debt off: reduce spending, use coupons, use money savings tips, earn extra income, etc.
- Pay off small bills first. Pay down any small bills and debt first. Once all your small bills have been paid off start tackling the larger bills. Setup payment plans for bills you cannot pay off in full. Be sure the account balances are updated on your credit report.
- Support network. Surround yourself with at least three people who are doing better financially and gain financial advice from them.
- Seek professional help. Consult a financial coach, financial planner or advisor to help you create a budget or spending plan and provide recommendations to help you stay on track.
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