With unemployment on the rise and funds tightening, there’s no better time to learn how to spend smart. One of the most easy and common methods to save your money is to set a budget. Monthly budgets are financial planning tools that help keep track of your spending habits. Budgeting often has a negative connotation to it since it’s perceived to be a control measure, and no one likes being controlled. But that’s the wrong perspective. The fact is, you gain control over your money and will be able to do all the things you’ve planned without regrets or going into debt.
Here’s a few steps to begin:
Find the sum total of your monthly income. Add up dependable monthly earnings like wages, investment incomes, average tips or bonuses, unemployment benefits etc.
Find the sum total of your monthly expenses. Add up the amount that “disappears” every month. This includes fares like rent or mortgage, entertainment, medical expenses, average food bill and so on. Find an average for expenses that do not happen every month like car insurance or clothes shopping. It would be helpful to check your checkbook and review credit card records and observe your expenses for a few months to determine an average. Also include the amount of money you want to save each month as a part of the expenditure.
Subtract your income from your expenses. It is possible for the expenses to be more than the income. In these cases you can increase income, reduce expenditure or or both. Reducing expenditure could be done in many ways like using coupon clippings, buying cheaper products etc. Increasing income could be done by getting a second job, making another member of the family work or getting a raise.
A few tips to keep in mind while coming up with a budget:
Put away the money you want to save first.
Have money from your checking account be directly transferred to your savings account.
Join a retirement plan at work.
Put your bonuses and raises in the savings account.
Make saving a habit.
For more tips on financial planning, contact Landmark Tax Service today, and get in touch with Robert Giaccone (CFP) who will help you with all of your financial queries.