A budget, or spending plan, is the best way to get control of spending and\u00a0review if your money is used the way that will benefit you best.<\/p>\n
Managing money\u00a0is a skill, and like most skills it requires a bit of discipline and lots of practice.<\/p>\n
Step 1: Journalize Your Spending<\/p>\n
Using a spending diary can help identify areas where you can reduce\u00a0unnecessary expenses. Logging your spending trends, such as the daily coffee\u00a0and donut, the daily newspaper, or even the soda for lunch, can be a rude\u00a0awakening. The coffee and donut can cost you $1,092 a year (assuming you are\u00a0spending $3 for a medium coffee and a donut\u2026$3 x 7 days a week = $21, $21 x\u00a052 weeks per year = $1,092).<\/p>\n
Step 2: Estimate Your Monthly Take-home Income and Expenditures<\/p>\n
Gather all your bills including credit card statements, receipts for groceries, gas\u00a0or anything else that you buy with cash. You should also have your checkbook\u00a0register available to review additional expenditures. Write down all of your\u00a0expenses, broken down into categories for (1) fixed expenses like the house\u00a0payment, credit card payments and car payments; (2) flexible expenses that vary\u00a0each month, including the phone and electric bills; and (3) discretionary\u00a0expenses, such as a gift for someone\u2019s birthday or a scheduled outing.\u00a0Add up your total monthly expenses and total monthly income. Then\u00a0subtract the total expenses from the total income. The difference is available for\u00a0you to use as you desire. If the total difference is a negative amount, then you\u00a0are spending more than you are earning. In this case you should take immediate\u00a0action to adjust your lifestyle and expenses so you do not continue to\u00a0accumulate more debt.<\/p>\n
Step 3: Plan<\/p>\n
It is comforting and almost second nature to think that you will have more\u00a0money next year. But it will not happen without some serious commitment.\u00a0Before making any promises and thinking that your financial situation will change\u00a0automatically, plan for change.\u00a0Sit down and make some goals. Goals give you direction to realize your dreams.\u00a0Establishing goals for the short, mid and long term will help you achieve financial\u00a0security. Short-term goals can be met within a year, mid-term goals would\u00a0probably take a little longer, perhaps five years, and long-term goals may take\u00a0ten to fifteen years to achieve. Be descriptive and define the means to the end. If your goals are specific enough, you will be motivated to cut down on your\u00a0spending to reach those goals. For example, you can use this tactic:<\/p>\n
Goal(s) _____________________________<\/p>\n
Estimated Cost _______________________<\/p>\n
Target Date__________________________<\/p>\n
Monthly Savings ______________________<\/p>\n
Step 4: Reduce Your Spending<\/p>\n
The hardest part of the budgeting process is over; now comes the commitment.\u00a0Although it may seem impossible to cut your ties with some of your\u00a0expenditures, you will soon become comfortable with your new spending plan.\u00a0Cutting expenses is perhaps the biggest challenge people face. This can be\u00a0because they are already just meeting their financial responsibilities. However, it\u00a0can be accomplished. There are a few suggestions to consider:<\/p>\n
\u2022 Pay with cash instead of writing checks or swiping your credit card. It is so easy\u00a0to just write out a check or to pay with plastic. The after effects are not felt until\u00a0it is too late.<\/p>\n
\u2022 Withdraw a set amount of money every week. If you only have $50 to spend in\u00a0one week, you will monitor and perhaps be a little more frugal when it comes to\u00a0buying something you do not need.<\/p>\n
\u2022 Do not create more debt. If you cannot pay for it up front, do not buy it.\u00a0Should you come across something you think you cannot live without, step back\u00a0and reconsider. Do you really need the extra stress of one more bill? How is\u00a0making that purchase going to affect your planned goals? Even when you know\u00a0you deserve something, put your wants on hold until you have the cash to pay\u00a0for them up front.<\/p>\n
\u2022 Remember your weakness. If you like to shop for clothes on a weekly basis, try\u00a0to avoid going to the mall or places of temptation. If you find yourself\u00a0somewhere and you want to shop, only spend the allotted amount you budgeted\u00a0for.<\/p>\n
\u2022 Rethink your shopping style. Comparison shop! Plan your purchases before you\u00a0buy. Make a list of things you need before you go into the grocery store \u2013 and\u00a0stay within the list.<\/p>\n
Step 5: Pay Yourself first<\/p>\n
The easiest way to save is to think of this category as an expense. Try not to wait until the end of the month to see if you will have money left over to put into savings. Set up a separate savings account, best to have this money directly deposited on payday.\u00a0 It is very important to routinely compare your budget to how much you are actually spending. Once you become comfortable with the process you will be able to alter your categories and perhaps put a little more into savings.<\/p>\n
DMCC is a 501 (c)3 nonprofit organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt.\u00a0 Education is provided free of charge to consumers, as well as personal counseling to identify the best options for the repayment of their debt. To speak to a certified credit counselor, call toll-free 866-618-3328 or email\u00a0<\/em>contact@dmcconline.org<\/em><\/a>.DMCC is located at 1330 SE 4th Ave, Suite F, Fort Lauderdale, FL 33316.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" A budget, or spending plan, is the best way to get control of spending and\u00a0review if your money is used the way that will benefit you best.<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[15],"tags":[],"class_list":["post-216","post","type-post","status-publish","format-standard","hentry","category-budgeting"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p5shu1-3u","_links":{"self":[{"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/posts\/216","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/comments?post=216"}],"version-history":[{"count":5,"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/posts\/216\/revisions"}],"predecessor-version":[{"id":2068,"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/posts\/216\/revisions\/2068"}],"wp:attachment":[{"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/media?parent=216"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/categories?post=216"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.dmcccorp.org\/edu\/wp-json\/wp\/v2\/tags?post=216"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}