It seems like everyone is wiling to provide
you with budgeting advice. Everyone
from dear old dad to old Uncle Morty has something to say about
how you spend
your money. You may think you know where your money is coming
from and
where it is going, but if you do not have a written, monthly
budget you cannot know
for sure.
I’ve always told people that the most important budget advice I
ever received was
the recommendation to do a budget in the first place. You should
be surprised at the
number of people with kids, mortgages and minivans who have
never taken the time
to work up a family budget. Both parents may be working 50 and
60 hour weeks,
but at the end of the month they are struggling to make ends
meet as if they were
newlyweds just starting out.
If you don’t keep careful track of where you money is going, you
will never be able
to stem the tide of red ink. It’s that simple. Before you can
get control of your
finances, you need to know where the money is going. Everyone
has months where
more money goes out than comes in, but if you are running a
deficit month after
month, you need to get control of the spending. Unlike the
government, you don’t
have a printing press in the basement where you can just crank
out more cash
whenever you need it. If you do have a printing press in your
basement, we need to
talk, but that’s another story for another day.
Starting a budget can be a time consuming and painful process,
but it is absolutely
vital to your financial well being. Sit down and write out a
detailed list of all your
sources of income, including your salary and that of your
spouse, any interest
or dividends you earn on your investments and bank accounts,
etc. Next write out
a list of every recurring monthly bill – power, water,
telephone, cellular, internet
access, cable television, etc. Then go through your checkbook
and list all the
checks you wrote the last month and what they were for. If you
charge a lot of
items and then pay the bill at the end of the month, keep the
credit card statement
and write out each item on the bill, not just the total. It is
vital to have a list of
every expense you incur so you can see what can be trimmed.
Do this for at least a couple of months until you get a good
idea of your spending
patterns. You probably already have a good idea what your
monthly living expenses
are, but you may be surprised at how much is sneaking out the
door on things that
seem frivolous after some time has passed. For instance, did you
really need to
order pizza and Chinese takeout 10 times last month? Could you
have cooked a
few times and saved the cash? It is these type of things you
need to track in
order to work up a realistic budget.
Too few people take the time to work up a budget and stick to
it. Once you have
a budget program in place, it will be much easier to match your
income to your
outgo and to live within your means. Who knows, after a few
months of fiscal discipline,
you may even have some extra money to put toward your retirement
or your child’s
college tuition.
Feel free to use our
About the Author:
Ryann Cairns have been writing
debt and debt related content for websites for the
last few years. He is
currently working on various
topics from loans to gambling for
his employer, Strange Logic ,
a search engine
optimization company.
One of the sites he is responsible for operates in the UK debt
field called
UK Debt
Advice
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