Wednesday, August 24, 2011

Why am I always broke?

If you have never balanced a check book, you are in for a big surprise. Keeping a budget is a lot harder than it looks, and there is no better time to begin that now. It’s easy to start! Write down everything you spend for a week, then two weeks, then see if you can’t do a whole month. When you review your spending habits it will be easier to see where your money is going. The process might seem daunting but once you have it down, it can make your financial life a little less stressful. Break down the process into these six easy steps:
  1. Track your spending for a month.
  2. Figure out your monthly income and deduct your fixed expenses (e.g. Rent/Mortgage, Car Payment & insurance, utilities, and monthly debts – such as loans or credit card debt you pay down each month)
  3. Compare your spending to your disposable income – the amount of money you have left after your bills are paid each month.
  4. Prioritize your needs and wants & make realistic adjustments to expenses you can decrease. (e.g. If you see that you are spending $100 a month on fast food, consider packing lunch vs. driving-thu)
  5. Don’t forget to factor in money for fun stuff! If your budget doesn’t allow much money to set aside for recreation, get creative and make the most of the money you do set aside.
  6. Keep track of your spending and save receipts. Make sure you aren’t spending more in one particular area than you have allocated for your budget.
If you do have extra money at the end of the month, put it in savings! You never know when an emergency expense might pop up.

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