“A budget is telling your money where to go instead of where it went,” wise words of the budget expert, Dave Ramsey.

Creating a budget is important so that you can make the most of the money you work so hard for. The trick is, to spend less than the money you have coming in. Mastering the art of budgeting can have some major paybacks! Like bringing you closer to becoming debt free, so you can finally save some money for those buys on your wish list. Or, just eliminate some of that stress that can come along with paying the bills each month. Whatever the motive may be, here are some steps to follow to bring you closer to reaching your financial goals.

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Learn the difference between needs and wants

You may want to add HBO to your TV package…but do you really need it? Actually, do you really even need a TV package when you can stream all 9 seasons of The Office on Netflix whenever you want, for only $9 a month? Granted, TV and entertainment are not a necessity. Which is why it’s important to really think about what aspects of your monthly bills should be considered something you need, or something you pay for because you want it. When you can cut down the money you spend on wants, your lifestyle will only change slightly, but you’ll have more money for unavoidable bills.

 

Do some research

The next step after you nailed down a list of necessary bills, is to determine a safe number to save for each of these expenses. A good rule is to guess high on expenses, and guess low on money coming in. That way, there’s no surprises. Worst case, you have a little money left over at the end of the month that you can put in the bank!

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Pay early

You can even set up automatic payments from your bank account. This strategy can then help you cut down on unnecessary spending. Also, leave you with the exact dollar amount you have to use on groceries, clothes, etc.

Try to save for emergencies

If you do have any extra money after paying bills, save! As tempting as it may be to spend that money on something else, saving for emergencies is crucial. Life has a way of throwing obstacles in our way, so having an emergency fund can be a great cushion for when some unforeseen expense comes along. Otherwise, you’ll end up having to borrow from somewhere else, which can ruin all the work you’ve put into budgeting in the first place.

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Keeps records

Keeping records doesn’t have to be complicated. You don’t have to create an excel spreadsheet to have a successful budget (unless that’s your thing, go for it!) Simple pen and paper will do just fine. Having records of your spending can help you stay on track because all of those numbers and decimals can get mixed up in our heads sometimes. If you’re looking for a shortcut, check your bank statements.

Make Goals

Don’t stop after your first success! You paid off your credit card, what’s next? The less debt you have, the more money you can spend elsewhere.

For more help on making the most of your money, schedule an appointment with a trained financial counselor at Cristo Rey Community Center through our Financial Empowerment program.

 

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