Painful but necessary – making a budget

10 Apr Painful but necessary – making a budget

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?1) 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.  2) 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. 3) 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. 4) Use the freed up money wisely. How should you spend that recently liberated money? On these two things:

•                 Pay down debt using the Debt Snowball method
•                 Start making investments – even small ones. 

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. To your success…