It might not be fun or glamorous, but learning to budget your finances is an important part of maintaining your financial stability. Having a good budget in place can help you identify what aspect of your finances needs to be strengthened. Below, we give you some tips that can help you create a practical monthly budget.
Know Your Monthly Income
Before you can make a budget, you need to know the actual amount of money you have coming in each month. This requires you to do more than just divide your salary by 12 months. You also need to deduct income tax, your pension plan contributions, and anything else that is docked from your pay. If you don’t take account for these deductions, you’ll end up with a misleading idea of what you are capable of budgeting with.
List & Keep track of Your Expenses
Separate your expenses between those that are fixed and those that are variable. Expenses like your mortgage, car payments, and student loans are considered fixed, while expenses that pop up every now and then are variable. Entertainment and groceries are examples of variable expenses. You can use a budgeting tool, like an Excel spreadsheet, to tally your monthly expenses.
Make a Plan to Save Money
No matter how small the amount is, it is always a good idea to set money aside every month. Most financial experts suggest saving at least 10% of your monthly income. You can choose to have a portion of your income automatically transferred from your checking account into your savings account, this way you won’t have the excuse of forgetting to put money aside.
Analyze Your Financial Habits
Keep all of your receipts and study them to figure out exactly how much you are spending each month. Average up your expenses for 2 or 3 months and use the figure you come up with to plan your future spending and saving strategy.
Set Goals for Yourself
Having specific goals to shoot for can help you pay off outstanding debts faster, which will free up more of your income for future financial planning. Pick one of your debts or expenses, and set either a short-term or long-term goal to have it eliminated from your monthly budget.
Are you in debt? Have you been considering filing for bankruptcy? Contact our team of Myrtle Beach bankruptcy attorneys to schedule a free consultation where we can discuss your debt relief options.