A house cannot be run without having a budget. If you’ve never done a budget before, start with a simple budget. First, total your monthly income. Second, track all your expenses for that month. Lastly, do the following math: income minus expenses. That’s the gist of what a budget is.
If your result shows more income than expenses you have a surplus. You can use this money to pay down debt to eliminate it faster or you can put it into a savings plan.
Analyze your finances to see how you are spending your money. Tracking your spending makes it much easier to see how you have spent money each month. Start by finding a method of tracking that works best for you.
Here are some easy methods:
- Use a small notebook. Carry a small notebook for jotting down all daily spending, whether by cash, debit card, check or credit card.
A good way to secure your financial future is to set goals for your money. Writing down your goals forces you to be accountable with your money. Most people who have gotten wealthy did it by setting goals and striving to reach them.
The key to a personal wealth creation strategy is based on setting financial goals. The more information you have written down the higher your success rate will be. In preparing your goals:
• Write your goals down, be specific.
• Establish time frames.
• Set up a plan.
• Be flexible, goals can change.
Often times when it comes to spending and cutting back we think of “big ticket” items like a vacation, a new car or a new TV. But you can really make a difference in your budget by making minor changes to your monthly bills. This is where minor changes can really add up. Here are a few things you can do..
- Check your cell phone plan and see if you’re on the best plan for your current usage. Downgrading a plan to a lower one results in $10/mo change ($120/yr or $600 every 5 years). Remove add-ons like a protection program or roadside assistance. You’ll rarely if ever use these.
- Air conditioner / heating usage. You can make sure you close all your windows and seal them up as good as possible. You can turn it on for a 30 minutes then leave it off for a while, then repeat the process as needed.
- Happy hour. If you eat at restaurants from time to time, go during happy hour. At most places, appetizers are half price and this can really add up in the long run.
- Driving. You waste less gas on freeways than on streets, so find the quickest route to the freeway possible. Go anywhere between 50-70 mph without accelerating and decelerating too much for better gas mileage.
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