Everyone should have a budget. Regardless of what your financial status is in life, the money you have must be managed properly. You must always remain financially prepared for emergencies, opportunities, and goals. If you’re reading this, consider the benefits of discovering ways to save more and spend less. When you’re living within a budget, you are empowered to dismiss stress of financial burdens and experience peace in understanding what you can afford to spend or save. Whatever the case may be, following a few simple steps in developing a financial plan can eliminate debt. It’s a lot easier to budget when you have actual money to budget with.
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There are three simple steps that will help you establish control of your finances and help keep more money in your wallet:
1) Establish A Plan
Assess your financial situation by creating a plan to help you track how you spend your money on a monthly basis. List your monthly income, which includes anything that is received financially. Then create a list of expenses that must be paid every month. Here’s a calculation sample:
MONTHLY INCOME: ________– FIXED COSTS: $________ = POTENTIAL SAVINGS
2) Track Your Spending
Review your bank statement or simply write down your transactions for the month. It’s important to include everything you spend in detail, in order to recognize how your budget is impacted.
3) Know What You Can Live Without
Review your monthly financial plan and define a need versus a want. A need is something that you must have in order to survive. A want is something you desire with the hope of fulfilling your happiness. Your financial behavior is a compilation of what you purchase, save, and invest with your money. Taking a look at what you can and can’t live without is key. If you simply cut down on certain monthly expenses, which may include: cellphone, gym memberships, cable television, food purchases and miscellaneous dues or fees. Your monthly expenses would soon decrease.
Creating a budget helps you get through any financial challenges that you may find yourself dealing with. A budget will allow you to watch how you spend and recognize ways to curve any problematic financial habits.
Written By: Pilar Nova, Blogger, Finance Guru