Whether you are in the process of saving money for a large purchase or you find that you need to get out of debt, there are many appropriate steps for you to take. You have likely already thought about increasing your cash flow and of making a few cuts here and there, but you also need to take the long view and consider instituting and monthly budget.
One reason why debt gets out of control very quickly is that people don’t know what their money is doing. If you have ever been surprised by how little money there is in your bank account, there is a good chance that you need to think about budgeting. Budgeting tells you how much money you have to work with at all times, and it makes you more mindful in general about the money that you are spending.
Start with the hard part, and make a list of all of your expenses. Start with the large expenses, like rent and insurance payments, and work your way through bills and other payments. Seeing a list of these expenses together can be enlightening for you, and adding up this column of figures will allow you to see what money needs to go out every month.
Sit down and figure out how much money you have coming in every month. This may be as simple as adding together the numbers on your paycheck, or it might involve pulling together stacks of invoices. This tells you how much money you have coming in.
Make sure that the expenses column is smaller than the funds column. If it is not, you need to find a way to cut expenses or increase funds. Subtract the expenses from the funds, and the result is the money that you can afford to spend on non-essentials over the month. Decide what to do with this money, whether you want to save it or spend it, but do not spend more than this amount on things not on your expenses list in a given month.
It is worth your while to create a fun budget. Make sure that a certain amount of your budget is set aside for something enjoyable every month. Having a fun budget means that you are less likely to get completely frustrated with being denied and go on a spending spree.