Here are five simply steps to successful budgeting:
- Income – List all sources of income, whether it be a regular paycheck or irregular income streams.
- Expenses – Know and document your regular and irregular expenses.
- Prioritize Wants vs. Needs – Make a list of all of the things you spend money on each week and each month. Label each of those items as either a want or a need.
- Save – Make your savings account a priority. You should have at least enough money in your savings account to cover 3 months of living expenses. If you don’t yet have this fund in place, begin removing wants until you make your savings goal. Then, continue saving for future expenses such as retirement, health care, tuition, etc. Resist the temptation to skip these goals.
- Assess – Be sure to assess your budget and financial situation monthly. Make sure you keep updating your budget to mirror reality, making changes to income and expenses as needed. If your savings goals are not being met, keep trying anyway. Persistence wins. As you begin to meet your goals, slowly introduce your wants back into your regular budget.