Car loans. Credit card payments. Home mortgages. Life can get expensive, and keeping track of your money every month can be hard. You get that nice paycheck bi-weekly, and before you know it, you’re waiting for the next payday to arrive.
But there is one way to track where your money goes. And that’s called… a budget!
A budget can have a bad rep, but if you put in the time and the work, you can even have a little fun putting it together. Sometimes a budget can feel restrictive, but it’s another way for you to gain freedom and control over your money.
Track Your Expenses
When you track your expenses, you can develop an action plan to get where you want to be with your money. You can see how much you’re spending every month, compared to how much you’re making every month. A budget is a tool to help you build wealth and invest in your future.
It’s important to track your expenses on a daily basis. Divide your spending into categories, such as living, entertainment, and savings. This can be eye-opening as you see any areas where you might be overspending.
As you begin to build your budget, check your bank account and observe where your money goes. Consumer Financial Protection Bureau lists some great questions to consider, such as:
• Where does my money come from?
• Where does my money go?
• What are all of my bills and when are they due?
Set Your Goals
Dreaming up financial goals to help plan for your future is motivating. Do you want to buy a house someday? Are you looking to pay off any debt? A budget can help you determine where you want your money to go so you can meet those goals.
According to Debt.com, 85% of people who budget mention that budgeting has helped them either get out of debt or stay out of debt.
As you start planning your goals, be honest with yourself about your current financial situation. You can’t get where you want to be unless you recognize where you are. Choose realistic goals and take financial inventory of your situation.
The best part about keeping a budget? It’s easy to get started. There are plenty of free options available at your fingertips. Whether you decide to track your expenses through an Excel spreadsheet or use an app, like Mint or EveryDollar, you can get started wherever you are on your financial journey.
It’s important to find the best process that works for you so it’s easier to stick with it in the long term.
Give yourself grace as you start your budget. It’s easy to underestimate how much you’ll spend or you might even forget some expenses. This tool can take a while to perfect, but once you get the hang of it, you’ll feel much more in control of your finances.
Budgeting is the best way to take back control over your spending habits and learn how to build a better and brighter future.
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