Money makes the world go round. So it is important to keep a consistent record of the amount of money you have coming in every month. I’m sure you heard this before, but it is important to actually pay attention to your income and where those funds go.
Come to terms with what you really need and what it is that you want. There is a clear difference. Needs are essential to life such as mortgage/rent, food, and utilities. Budgeting enables you to determine how much you can afford to spend on your wants. Taking time to truly determine the difference in the two will benefit you in your efforts of maintaining your budget within your means.
Always Include a Miscellaneous Category in Your Budget
After totaling the complete amount of your expenses, take 10% of that total and put it into a “miscellaneous” category. This creates more flexibility in your budget because it’s ensuring that if you’ve omitted something from your calculations, you won’t go over budget.
Include Savings as an Expense in Your Budget
Decide on an amount you’d like to save each month and commit to it as a necessary expense in your budget. Ways to eliminate temptation is to create a separate savings account and transfer or deposit those funds every month. Decide whether that saving will be used for short-term goals (vacation, large ticket item) or long-term goals (college tuition, or house).
Keep Records Organized
Organize all bills and receipts by category (e.g. housing, utilities, car expenses, loans) and file them accordingly. There are several tools you can make this process a bit simpler such as online banking, QuickBooks or Mint.com.
Use Cash for Small Expenses
Give yourself a daily, weekly, or monthly allotment of cash and do your best to stick to it, but also forgive yourself if you overspend from time to time. Focus on the goal at hand and you’ll be well on your way to financial freedom.
Contributor Xavier Peoples