Budgeting, like anything in which you wish to achieve success, takes careful planning. If you were planning a great U.S. vacation to see several historical sites over the course of a week or ten days, you would not head out without some sort of plan. The same holds true for an effective budget. Here are four simple steps you can follow to create your very own successful budget.
Start by tracking your spending. Analyze your spending on everything from your rent or mortgage payment down to gourmet coffees and ATM fees. You will need to include all of your utility payments, cell phone bill, and all entertainment expenses. The goal is not to cut out all of your enjoyment, but once you analyze where your money is going you can make adjustments to make your budget work for you.
Pay yourself first. When you get paid, you need to make automatic savings contributions. The general rule is 10 percent. If after analyzing your spending you can afford to contribute more in savings, do so. Long-term savings should be directed into retirement savings tools like an IRA or 401(k) plan. Short-term savings accounts that you have direct access to can go into interest-bearing savings accounts.
Make a list of your priorities and make sure they are met first. If you have mounds of credit card debt, plan to pay it off first. You could even consolidate it with a car title loan. Embassy Loans of Florida has helped thousands of customers obtain car title loans for a variety of reasons. You could consolidate some or all of your credit card debt into a car title loan and then devise a plan to pay it off with your new budget. If you have other savings goals – a child’s education, for example – include that as part of your plan.
Use cash for all discretionary purchases. If you force yourself to pay for groceries, gas, clothing, and other items with a set amount of cash that you withdraw to start each month, you will find that you do a much better job of watching your spending. Using credit cards and even ATM or debit cards creates a tendency to overspend. Give yourself a set amount of money each month to cover necessary purchases (food, etc.) and certain unnecessary items (coffee, dining out) and stick to it.
By planning your budget, you will find that all of your bills will be paid on time and you will experience much less stress. Follow these four steps to keep your finances from becoming a problem.