Budgeting is not just a way of keeping tabs on where your money is going – it's a vital part of financial success. But, for many of us it can start to slip away as we get busy. Or, we may abandon budgeting after we find ourselves repeatedly disregarding our monthly outline. Developing a budget –and more importantly sticking to it – is vital to managing your money, and reaching your financial goals.
Keep Your Budget Top of Mind
Don't think of a budget as something you have to hold yourself to down to the penny. Instead, use a budget as a roadmap of where you should expect to spend your money each month, and areas you can adjust in order to save. Posting your budget in a place where you can see it will help remind you of where you stand throughout the month. My personal preference is an electronic spreadsheet which allows me to make regular adjustments while keeping the information neat and presentable.
Assess Your Income
To create a budget, you'll first need to assess your income and expenses. If your income and fixed expenses are very close to each other, you may want to analyze them by category; as fixed or variable expenses. If you already are living as moderately as you can and are unable to reduce those of a fixed nature, you'll then need to consider your other expenses, such as dining out, entertainment, travel, and gift expenditures. Taking on a second job to increase your monthly income may also be an option.
Getting Out of Debt
A common alternative is to use a debt consolidation loan. This takes several debts you owe and combines them into one monthly payment. This option can be enticing and give the appearance of a quick fix, but beware. If you aren't disciplined, you will fall back into the credit card trap. This only worsens your problem because now you have that extra consolidation loan payment. My advice is to work with focused intent to pay off those credit cards one at a time. This exercise will aid you in understanding the impact credit card balances have on your finances.