Budgeting is a fundamental step towards taking control of your financial wellness.
So here are some ideas to get you started:
Track your expenses for a month. Look at your account statements, use a budget tracking app, or log your purchases in a notebook.
Figure out how much you spend every month on things like food and entertainment, savings, housing, insurance, transportation, and debt. Use the categories that make the most sense for you.
Now add up these amounts to calculate your monthly expenses. Then subtract those expenses from your monthly income. If your expenses are greater than your income, you need to adjust your spending, or increase your income, so your income is greater than your expenses.
So how do you adjust your expenses? Look a little closer at your categories. Maybe you can’t negotiate your rent down, but you could spend a little less on going out to eat, and still be comfortable. Avoid cutting savings, if possible.
Once you figure out your monthly budget, continue to track, categorize, and total your spending to make sure you’re staying within your target amounts.
The more attention you pay to saving, the easier spending it gets. After a few months, you may reach a point where you no longer have to guess whether you can afford something because you’ll already know how it fits into your budget.
To learn more about how to take control of your financial future, check out the other videos in our Finance 101 series.