Determing where your money is going helps create an honest budget.
Organizing your money by creating a monthly budget allows for smarter spending habits and long-term financial planning. In the article, "Build Your Budget," from "Kiplinger," a budget is defined as "a means of setting and reaching your goals." No matter what your income level is, taking the time to start a monthly spending and savings plan can offer an honest appraisal of how your money is --- and isn't --- working for you.
Instructions
1. List everything that you spend in a month. From the monthly bills such as the mortgage and utilities to the daily latte; knowing how much is coming out of your pocket is a necessity when creating an honest budget. Be mindful of those expenses that can slip through the cracks such as daily bus fare, subscriptions and any membership dues. Some people find that saving all of their receipts or writing down each purchase for at least one month helps with this process.
2. Write down all income streams. This obviously includes any salaries, but also refers to extra payments you may receive. Perhaps you earn $25 each time you referee a high school game, have a small online sales business or do a little dog-walking on the side. Account for every income source for an accurate budget.
3. Determine both short and long-term goals. Short goals include saving for a vacation or a large household purchase, and long-term goals include paying off debt, socking away a emergency savings account and preparing for a retirement plan. Having goals and getting closer to meeting them can help maintain a monthly budget.
4. Subtract your monthly expenses from your income. This will give you a nuts and bolts example of where you are at and help determine how realistic your savings goals are and what needs to be tweaked. Often, just a small adjustment in how disposable income is spent can lead to more responsible financial planning.
5. Stick with it. Anna Vander Broek writing for Forbes.com reminds people "It's not the carefully planned European vacation that will wreck your budget. It's a steady stream of $20 manicures and $100 bar tabs. Once you've established a budget, check every week to see if you're staying on track."
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