5 Steps to Creating Financial Serenity
Are you tired of avoiding your checkbook? Is your debit card ready to shred itself? Maybe it’s time to create a budget. A budget is a useful tool to help you keep track of, as well as analyze your finances. You may find unexpected opportunities to save money or payoff your loans faster. Grab paper, a pen, and a cup of joe. Let’s get started.
Creating a Budget:
STEP 1: Write a list of your standard monthly expenses. If they have concrete due dates and payment amounts include them in your list. Phone bills, mortgage payments and utilities bills may fall into this category.
STEP 2: Jot down a list of unexpected expenses per month. These can include, but are definitely not limited to: flat tires, doctor appointments, data overages, gifts, etc.
STEP 3: Create a spreadsheet. If you prefer a notebook, go for it. Both methods will work. The chart’s columns will include:
- Amount owed
- Due date
- Amount paid
- Date paid
- Reference or check number
As long as you have all of these columns, the order doesn’t matter. You can also add a comments column if you deem it necessary for your records. Save it with a catchy name, like monetary mysteries, vacation impediments, or monetary distributions. The important thing is that you remember what you name it. As long as you can find it, that is all that matters. We included an example template for your reference.
STEP 4: Fill in the chart with your standard monthly expenses. As bills come in, enter them in your spreadsheet. As they are being paid, fill in the rest of the payment information, such as amount paid, date paid and reference or check number. You can use the last column for the references numbers given when payments are made online or for the check number. You may want to add a comments column just in case there was an issue with processing the payment or additional one-time fees that were included in this payment.
STEP 5: Add up your expenses for an average month and compare it to your monthly income. This will give you an idea on how much you can spend on that new Keurig or new couch. You could even save up for your next vacation!
- Dedicate one person to manage the billing and the budget. No one likes it when things are paid twice.
- Pay yourself first. Save up for a vacation to Hawaii or pay your relatives a visit in Florida. Have an automatic deduction from your paycheck into a savings account. You can’t miss what you never realize you had. Use your budget and how much time you have until the trip to figure out how much money you need to save.
- Commitment is key. Keeping a budget is something that has to be constantly updated. It doesn’t take long, but it does take commitment.
- Analyze where you could save money. What are you spending the most on each month? Are there any expenses you would want to cut? Try looking into other companies who offer the same type of product. Instead of paying for cable, a satellite option maybe cheaper.
Creating a budget may seem like a lot of work, but it will be worth it once the initial chart is complete and you created your own process that works for you. For now, just take a deep breath and think about what you would like to accomplish with your budget. If you get stuck or have questions, Hudson Heritage FCU offers BALANCE™ FREE Financial Counseling to all of our members. Keep your budget up-to-date and you’ll be in Cabo before you know it!