MAKING A BUDGET

Knowing where your money is going makes it easier to cut back and not waste.  Almost all of us have extra money in our monthly budget that we don't even know about. Making a budget will help you find that hidden money and put it to good use to pay off your debt and to make your financial situation more secure.  I believe that most of us spend more money on things that we don't even think about and forget about in a matter of moments. Over the course of a month or even a year, these little purchases can add up very fast.  This is why it is so important to make a budget and stick with it.  

Making a budget is much easier to do than most people would expect.   It will take lots of dedication on your part but if you truly want your financial situation to improve, then creating a budget is the first step.  

Step #1.  Keep track of every penny spent.  This can be done many ways.  You can keep all of your receipts either in an envelope or box, whatever works best for you. 

Write down every purchase, I mean even the sodas or snacks at work. Keep a very good record of what you are spending.  Write every purchase down in categories so that you can see where you have been spending your hard-earned money.  You will probably be shocked at where that money has been going.  Most of us spend more than we think we're spending.  A dollar here and there doesn’t sound like much but can really add up fast.

Step #2.  If you have a bill like car insurance that only comes in once every six months then divide that amount by six and record it as a monthly expense. 

Step #3.  Check your budget every few weeks to see where changes should be made.  Keep an accurate account of money coming in and going out. In a few weeks, you'll see where the money is going to the wrong places and how to get it going to where it should be.

Step #4.  Now that you know how much money is coming in and how much is going out, it is time for you to predetermine where the money should be spent. 

Write down where you want each penny to go before you spend any of it.  This is not as hard as it sounds.  In fact, it can be fun. 

Write down how much goes to each payment. Now write down how much you have left for extras, anything from a fun night out to that special trip that you would like to plan. 

The point is to budget all of your money so that you're not over-spending and charging money on a credit card that you cannot afford to pay off at the end of the month.  It would be pointless to create a budget then keep using a credit card and only making your financial situation worse.  Always remember to spend less than you earn.