Budgets are essential to keeping your finances in order — and setting one doesn’t have to be scary. Once you master the art, you’ll have a good handle on keeping tabs on your money.
Getting Started
The first step is collecting statements. Bank statements, utility bills, investments — you’ll want to gather anything related to income or expenses.
Next, record. For income, make sure you pay attention to all sources. If you have a regular paycheck, use your net income. When it comes to expenses, write down all of your expected expenses for the month. This includes anything from car payments to retirement savings, and everything in between.
Methods of Sticking to a Budget
Now you’ll want to decide what method of keeping a budget best fits your lifestyle. Envelope budgeting is a tried and true method. You’ll have separate envelopes set aside for each expected expense, and you’ll put the amount of cash allotted to each in its envelope. That’s the amount you have for the month.
Perhaps more practical in today’s credit-centric world is using prepaid cards, such as the Reach card. You’ll have the same control as envelope budgeting because you can put the allotted amount on the card, plus you can use these cards as you would any other credit card without the hassle of worrying about tons of cash.
Next Steps
Once you have everything set up, total both income and expenses. Then you can make necessary adjustments. If income is more than expenses, you have the flexibility to allot funds each month to college or retirement funds or to getting rid of debt. If it leans the other way, you’ll want to adjust your expenses to get your budget closer to being balanced. Then you’re well on your way to setting a monthly budget!