No matter what kind of money you make, it’s imperative to set a budget in order to always stay on top of your finances. Sometimes our financial affairs can dip into the red, in which case it becomes necessary to tighten the budget up significantly to remedy the situation. Here is how you can go about creating a budget that will successfully bring you back to a more comfortable balance.
- Determine Your Income –If you aren’t 100 percent sure how much money you’re bringing in each month, the chances of overspending are obviously much greater. If your income is unpredictable, figure out your average and budget for less.
- Establish Priorities – You should allocate about half of your monthly income to the usual suspects; housing, food, and transportation. After this, set aside some income to pay down any debts you may have. After the housing, food, transportation, and debt situations are taken care of, set your own priorities for things like household items, entertainment, savings, and so on.
- Saving – Save a portion of each paycheck. If your budget only allows you to set aside $10 of every paycheck, then that’s all it allows. Don’t try to save an entire emergency fund up in a handful of paychecks. The process of building up a savings account is a long one. There’s no reason to set aside every extra dollar and deny yourself the occasional pleasure. In fact, not treating yourself once in a while will make you resentful of the money you worked so hard for.
- Go Cash Only – Start pulling out enough cash every Monday to get you through the week for discretionary spending. After paying the bills and debts, pulling cash for the extra stuff will help you to decide what is really important. It’s a lot harder to lay down cash for some new toy than it is to swipe a card.
- Ditch the Vices – Money spent on smoking, drinking, scratch-offs, or whatever it is can be applied to other areas of the budget. Habitual spending on vices very often accounts for a much greater portion of a person’s spending than they realize. It’s also much healthier. Use your budget as another reason to stop smoking or drinking, and both your health and wallet will thank you.
- Be Forgiving – Living by a strict budget is no easy task, and you will most certainly go over some months. Try to allow a buffer amount to cover unforeseen expenses, but don’t beat yourself up every time you go over. However, if you consistently go over the budget every month, it may be necessary to reevaluate the budget.
Use these budgeting tips to whip your finances into shape. It may also benefit you to consult a bankruptcy attorney to determine if you could benefit from filing bankruptcy.