Whether you have a budget or not, now is a great time (while it’s so cold outside) to check on your numbers. Is your spending matching what you have on your written budget? Don’t even have a budget? Here are the steps to make one, or to check.
Making a budget can be one of the most powerful tools for getting your money to do what you want it to do. In order to build a budget, find out what and how you are currently spending. You can do it by taking these steps.
1. If you use a debit card, go to your checking account either on your phone, computer or your monthly statement. Determine a 30 day period (i.e. March 1 -31, or February 15 – March 15). Any 30 day period will work.
2. Go through each debit (spending) item and put it in the proper category on the sheet provided. Feel free to change or add categories as needed. Break out each purchase if necessary. If you go to the gas station and fill your tank and buy a bag of chips, put the dollar amount you spent on gas under the Gas category, and put the dollar amount you spent on the chips under the Snacks category. If you aren’t sure, just make the best guess you can.
3. Once you have completed the 30 days, total up each category.
4. Put the totals from each category into your budget.
5. Add your fixed payments into your budget as well. (i.e. house payment, car payment, insurance, cable). The payments that stay the same each month.
6. Put your Total Monthly Income into your budget. Don’t forget to put bonuses, child support, alimony, etc.
7. Subtract your monthly expenses from your monthly income.
You have just made a budget! Congratulations! Do you have a positive or negative number at the bottom?
If you have a negative number, here are a few ideas to help change that.
1. Go to those categories that you have the most control over such as groceries, eating out and entertainment. Decide how much you can cut from these first.
2. Take a look at your fixed expenses. Can you cancel the premium channels from cable? Is the car you drive just too expensive? Can you change your cell phone service and get a better deal?
3. If your spending is as low as possible, the other possibility is to increase your income. Consider getting a part time job. Do you have a hobby that you could parlay into some income such as cake baking or sewing? How about house cleaning or dog walking?
What’s important to remember is that these cuts or the extra job isn’t necessarily forever. You just need to do it so that you can pay down your debt and get your budget under control. Once that is done, you can ease up and relax a little.