Where did my money go?
At the end of the month, do you find yourself wondering exactly where your money went? Do you feel you should have more to show for your hard work than you currently do? Are you and your spouse or partner often fighting about money or spending?
If any of these are true, you may want to consider creating a budget.
The first step in creating a budget is to determine why you want to create a budget. Though it sounds counterintuitive, knowing why you want to create a budget, and then creating that budget with that specific goal in mind will increase the likelihood that you’ll actually adhere to it. After all, there’s no sense in creating a budget if you don’t plan to follow it.
If you’re tired of wondering where your money went, or living paycheck to paycheck with fading hope of getting ahead, a budget can help. Here are a few things you need to do to create a budget that will work for you.
- Find out what you actually spend each month. While it’s easy to remember recurring monthly bills and perhaps even how much you’ve spent on groceries and gas, those are likely not the budget busters. Instead, use a helpful app such as Mint, Quicken, or others to track and automatically categorize your spending. Alternatively you can sit down with your last few bank or credit card statements, and analyze the charges. You’ll likely be shocked by how much you spend on things like fast food lunch and other splurges.
- Create a spreadsheet or use an app to track income and expenses going forward. Once you’ve determined exactly how much you’ve spent in the last couple of months, you’ll want to have a tool to continue to track both money coming in and money spent. Take a few moments and create a spreadsheet that you can update weekly with all banking and credit card activity. Some may prefer to use an app, and there are several, that work with your laptop, desktop, smartphone, or tablet.
- Include one off items because they cost money too. When preparing your budget, make sure to include one-time, once a quarter, or yearly expenses such as holiday spending, birthday and anniversary presents, property taxes, insurance premiums, and association/professional dues. A great budget can fall short when Christmas come around, so make sure those items are included.
- Set a budget goal. Do you want to save enough for a vacation or perhaps a down payment on a house? Are you saving for tuition expenses for your children? Are you trying to get rid of your debt? Are your goals more long-term, such as saving for retirement? Having a goal, or several goals, will help provide incentive to create and stick to a budget when tempted to overspend.
- Don’t guilt yourself if you cheat. Don’t abandon your budget because you slipped. Its your money so splurging for an expensive lunch or dinner or a night out with friends is a choice you can make. Just go right back on the next day. A budget is to help with your success over time, not overnight.
It’s your choice if you want to make your budget restrictive or leave a little wiggle room. Either way, knowing exactly where your money is going does wonders towards helping you make smart informed choices with your money.
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2021 Advisor Websites.