Set a Better Budget

budget-highlightsYou know you should have a better budget, but how is that accomplished, exactly?

Get Organized

Financial success is not the product of luck or of some magic power. It is about planning, accuracy and accountability.

Start by figuring out what all of your debts and expenses are. This sounds kind of obvious, but you’d be surprised at how many people don’t know for sure.

This is how money vaporizes every month- and you are left short and wondering why. Account for everything.

Write it Down

Determine your income and your expenses. Note your fixed expenses (utilities, car payments, rent/mortgage, childcare, etc.) on past bank statements or bills.

For the other expenses, that is where it gets interesting. You may need a month or two to track these to get a good idea of what you are actually spending, but that underscores the need to build a budget with intent to revisit down the road.

Remember all spending items- like entertainment, food, clothes, transportation, etc. etc.

Track it

Commit to paying attention to every penny- and to tracking it religiously. This sounds a little constrictive, but this is actually your conduit to financial freedom.

Use a simple spreadsheet, handy notebook or budget calculator.

Pare Down

You may discover, simply in the act of identifying and writing down how much you are spending, you are able to eliminate things right away.

Some sneaky extra expenses, like eating out frequently or grabbing coffee at the drive-thru rather than on your own are notorious money-grabbers- and you probably have no idea about how much you are actually spending, until you have an aha moment when you write it down.

Be Reasonable

Now, when you’ve gathered all of the info, you can project what you can spend on a monthly basis.

A few rules of thumb: don’t spend more than you earn. Include some wiggle room for rewards along the way and make sure you include some savings, no matter how meager. That’s your cushion to help you not rely on debt in an emergency.

Elasticize your Budget

Plan to be flexible- and to revisit on a regular basis (like every quarter). Making tweaks is not about failure- it is about recognizing the variable that is you living your life during your pursuit of this goal.