In the middle of the month or even towards the end do you feel like you are scraping by to make ends meet? Are you living paycheck to paycheck? You are not alone in this matter, millions of American’s are living just like you. However, you can change that by doing a couple of things. It is really simple to create and live on a budget but we make it hard on ourselves.
Know Your Income Level
How much money do you make per year after taxes? Do you know the exact figure? If not, that is where you need to start in creating a livable budget. Your monthly income can vary depending the lengths of months. So yes, February’s budget is different from October’s due to a difference in your pay periods. Sit down and see how much money you are bringing in for the year and then figure out how much you brought in per month.
Create A Livable Budget
Where most people go wrong with their budget is, they think of the most extreme ideas that will fast track them to the path of wealth. That does not work for everyone. As mentioned before, I am on the Dave Ramsey plan to pay off my debt. My goal is to be completely debt free in three years. It takes most Americans 30+ years to get out of debt. One thing I had to adjust for this program was my savings. The first baby step was creating an emergency fund with $1000. Instead of having that just for my personal life, my business also has an additional $1000 too. Next, I sat down and figured out where my money was going. How I could decrease in certain areas. For one, I was spending $80 a month in Starbucks. Oprah Chai Tea isn’t cheap. Now I only spend $40 a month. I switched to a different drink and I use my rewards to drink my expensive chai.
Take a deep look at where your money is going. It’s okay to go out to eat BUT the funds need to becoming from the monthly food budget not the I have $20 so let me spend it budget.
Using Budget Tools
There are so many tools out there that can help you budget. My personal banker, Lizzie, does the old school way with a pen and spreadsheet. My pastor and his wife use an excel sheet. Math was my least favorite subject and I personally believe my high school accounting teacher just passed all of us! I use the Dave Ramsey Zero Budget Tool at the start of the month and Mint.com. In addition, every morning I check my bank accounts to make sure everything is right.
Knowing your income, creating a livable budget that you can realistically live on, and using budget tools are all essential to getting your personal finances in order. Most people don’t see eating at Chipotle as coming out their food budget. Nor do they budget for birthday, holidays, or other expenses. Those are all things that need to be added to your budget. Your budget will not be the same every month so it is important to adjust as needed.
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