Budgeting your money is an important life skill to have. Having a budget can help you pay your bills on time, achieve a good credit score, and get out of debt. It takes a lot of self-discipline to stick to a budget, but financial soundness is worth it. Read on to find out how to get started on your personal budget.
List Your Expenses
The first step to making a budget is putting pen to paper and listing your expenses. Put your expenses in order of importance. Start with your vital expenses such as food and rent/mortgage. At the end of the list should be things like entertainment.
Visualizing what you are spending on various things helps you take control of your money and put a stop to frivolous spending.
Ditch the Cards
Budget-beginners should put credit and debit cards away for now. Instead, create a set of envelopes for your expenses: a gas envelope, food envelope, etc. Put your allotted amount of (cash) money for each expense in its designated envelope.
Spending can get out of hand quickly if you are using cards for every purchase. The cash-in-envelopes system only allows you to spend the money that you have in hand. Plus, cash makes it easier for you to see when money is getting low.
No Impulse Buys
Impulse buying becomes a thing of the past once you put yourself on a budget. This doesn’t mean that you can’t buy that cute new handbag! You simply have to save up for it first instead of purchasing it right away.
Eliminating impulse buys is a great thing for your financial health. You’ll have more money for the essentials and will be able to build up your savings. Also, the delayed gratification of saving up for an item before buying it makes bringing it home that much sweeter.
Remember to Save
When budgeting, don’t forget to put some of your hard-earned cash into a savings account. Don’t be discouraged if you only have a little to save. Your money in savings will add up over time. You will be glad you added to your savings account should an unexpected emergency arise.
I prefer using pen and paper to make my bimonthly budget, but others may wish to take a more high-tech approach. The free website Mint.com can help you organize your finances. You can connect your online bank accounts to Mint.com to help yourself track where your money is going.
Additionally, there is a myriad of budget apps (both paid and free) on the iPhone app store.