Financial Goal Setting:
Set a Budget and Stick to It
   

In a time of financial insecurity people become uncomfortable. Interest rates are going up, and the job and stock markets are unstable. Learning how to set a budget and stick with it can help you weather uncertain financial times, uncontrollable changes in income, or help you get out of debt. Plus, it is easier than you think to do.

The first thing to do is find out where your money is really going. Make a list of everything that you spend money on. Most people are unaware of where their money is. Start with a list of all your bills, including mortgage or rent, utilities, car payments, insurance, credit card bills, phone and TV bills, etc. Try keeping a journal of everything you spend money on, even if it is just fifty cents for a pack of gum. Anytime you whip out your checkbook or flash your credit card, write it down. Try doing this for a day, a week, or even a whole month. You might be surprised at how much money is leaving your pocket for little things. It will also give you a starting place of where to cut back.

Now, figure out how out-going spending compares to your income. Add all of your expenses together and find a monthly average. Compare this to how much you earn per month. If your expenses are lower than the money coming in that is a good place to be. If you find that you are spending more than you earn, now is the time to fix it. There really are only two options – either earning more money or finding ways to cut back. For most people, cutting back is easier to do.

Since you already have you list of expenses, cutting back will be easier than you think. Take a look at your list – what are your biggest money drains? What can you do to fix them? Spending a lot of money on TV and Internet? Try cutting back on extra subscription channels you do not watch, or look into service providers that offer all services in a cheaper package. Spending too much on eating out? Look into taking your lunch to work or cooking more at home. Are utility payments costing you too much? Look into energy saving options, programmable thermostats, and basic things like turning lights off in rooms you are not using. Buying too much Starbuck’s coffee? Look into getting a coffee pot at home – you can even program some the night before to have coffee ready in the morning. Spending too much money at the grocery store? Look into cutting coupons, bargains online, or special deals for members only. If you have out of budget purchases, such as buying a new car or a new appliance, shop around and make sure that you are getting the best deal. When you are finished, your income should be greater than what you are spending.

Lastly, write everything down and come up with a plan. If you get paid twice a month, figure out what bills need to come out of which paycheck. If all of your big bills are due at the same time, try paying some the paycheck before so that you do not get behind on any of your payments. Keep receipts from purchases and make sure that you are not going over your allotment for additional expenses.

Some final tips:

Use cash whenever possible. This way you always know exactly how much you spent and how much money you have left. Using your credit or debit card disassociates you from your money and makes it easier to over spend.

Avoid the use of credit cards. Limit credit card use strictly to emergencies only. Any everyday purchases should be made in cash. Do you really want to be paying interest for the next month and the groceries that were consumed last week?

Consider professional help. If you are seriously in debt and cannot seem to get it under control, it may be time to speak with a debt counselor. The sooner you can get things under control the better.

Wait on big purchases. Absolutely have to have the newest gadget on TV? Try waiting a few days or even weeks before sending your money in. You might find that what you thought you needed as merely a temporary impulse.

Before you know it, you will be in charge of your budget instead of your budget being in charge of you.

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by SolveYourProblem.com : 2006

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