Creating a budget can have a positive impact on your life by reducing uncertainty and financial stress. It allows you to set both short and long-term financial goals. Think of it as a fitness plan that helps you improve your financial health and prepare for the future you desire!
Start with the Basics
The first step is to assess your overall financial situation. Answer a few simple questions and use the provided worksheet to understand your income, commitments, and available funds for your goals.
1. Define Your Goal: Set a specific and detailed goal, including an amount and timeframe. This makes it easier to track and achieve your goal. For example, instead of saying “save more money,” specify “save $100 per month for the entire year of 2019 to have $1,200 for a new computer.”
2. Calculate Your Income: Add up all your income sources to determine your total take-home income.
3. Account for Commitments: Sum up all your monthly expenses and bills, such as loans, credit card payments, utilities, groceries, rent, taxes, and cable bills.
4. Determine Available Funds: This is the amount that remains after accounting for commitments. Think about your priorities and what you need to reach your goals. How you allocate your discretionary income is entirely up to you and your aspirations.
You Have the Power
Remember, your plan and goals can be adjusted as needed. It’s always wise to prioritize paying off debt and saving (pay yourself first!). You can review your budget and make necessary adjustments to reduce expenses or allocate funds differently.
Struggling with Your Budget?
If your income falls short of your commitments, do not panic. Your budget can help you find areas to save money and cut expenses. Additionally, FinanceMaster offers free debt and credit counseling for those who want assistance. A Debt Management Plan can lower interest rates and fees, helping you save money and pay off debts faster.