Anyone can look at their bank account balance, groaning and thinking, “there has to be a better way.” You need to budget to be able to handle money. Whether you have debt or are trying to save for something important, these 12 steps will help get your finances in order.
Paying Yourself First:The first step to saving money and building good habits is to pay yourself first. When you consistently put money into your bank account, it will be much easier to know how much you can spend each month and on what. You might also use this line of thinking in other areas, like paying for your health or working out regularly. Suppose you need help to concentrate on budgeting because of personal finances. In that case, we recommend writing a “budgeting workbook” on paper or in a journal so that you can have all the details of your budget with you at all times.
Start with the basics: Developing good financial habits at the beginning of the year provides benefits that last throughout the entire year and into the next year. Setting up those habits allows you to start years with a strong foundation.
Write down everything you spend money on each day: What are all of your expenses? Include every expense when writing this down- even the small ones like snacks or coffee that may seem insignificant.
Take the time to think about what you are going to spend before you spend it: Before making or buying something, consider whether this is something that you need and will use enough to justify the expense. Only buy it or make it if it’s frivolous or rarely used.
Stop overspending when you are down: If you take time off from work, call your family, or need to relax to reduce stress, make sure that you treat yourself to something fun every once in a while. Rewarding yourself is okay, even if it doesn’t fit your budget!
Be honest about your spending: If you use your money to pay bills, buy groceries, and spend on other necessities, it might be a good idea to get a part-time job.
Find an easy way to record inventory: If you decide to buy new items, they will take up a lot of your money initially, which can cause you to blow it all on unnecessary stuff. By setting up an easy way of recording inventory, you’ll have a better idea before purchasing that item what it’s worth and whether or not it’s worth buying versus buying something newer.
Never buy things on credit: No matter how good the deal is, if you don’t have the money to pay cash for it, then you don’t need the item.
Set realistic savings goals:If you want to be able to retire early or pay off distant family members’ debt, you will need to set aside a certain amount of money regularly that is easily achievable through outsourcing cash-based jobs such as cleaning houses or lawnmowing; otherwise you will never achieve the goal.
Understand the pros and cons of investing: This will allow you to know whether or not investing is a good financial decision for you, and if it is not, you will then know why without wasting time with faulty information from investment advisors who do not fully understand your financial situation.
Use technology to your advantage: The most successful people with the most money and who have had the longest-lasting financial success use technology to their advantage. Most of the top financial minds in today’s society use apps, websites, and mobile devices to help them budget their money, track their purchases and expenses, set goals, and find opportunities to save.
Change your mindset on debt: Getting into debt usually occurs because of an emergency or because you want something that you can’t afford without getting a loan to pay for it. Have your brain think of all debts as bad and get into the habit of saving up for the things you need before incurring debt with a loan, credit card, or line of credit; they are all simply bad investments in the long run!
Make a list of necessary bills and need-to-have items for that month: This includes groceries, utilities, rent, etc. You can make a list of each bill or simply organize them based on categories so that you know where to keep track of them.
Calculate your total income, then subtract all of your expenses:This will help you see how much money you have left over each month after all bills are paid. Use these figures to show you how much money is being saved and how much needs to be saved before your next goal is accomplished.
Start an emergency savings fund: No matter how small, throw something into your savings account every time you get paid. You’ll be able to cover any expenses that pop up while still staying on track with the rest of your budget.
Negotiate your rates: make sure that all the financial services you use are competitively priced by shopping around. Car insurance? Credit cards? Home loans? You don’t have to stick with the first place you went for business.
Revisit often: Review your monthly statements for errors and ensure all automated payments go through as scheduled.
Ask around: if you need help figuring out where to start, ask friends or neighbors what they do for budgeting and finance. You might find some good ideas and partnerships for your plan.
Make your money last: if you know that a certain event is coming up, make sure you have enough money in savings to cover it. If not, find some ways to reduce the spending around the house. A little reduced indulgence will make your spending go further next month.
Budgeting is one of the most important financial decisions that you can make. Please don’t feel guilty about doing this; it is a positive way to live. When budgeting, take care of yourself and remember that there are always ways to save money without suffering.