Budgeting Finances in Three Easy Steps

Once you figure out that you don't have any money left in your checking account, and you are digging loose change from your sofa cushions to pay the pizza man, you know you NEED to budget. In the United States, it seems most people buy and don't think much about saving money and conserving. When you look at the world today and see the amount of debt this and other countries around the world carry, it's no wonder we all think it's OK to live paycheck-to-paycheck. So now , you realize you need to budget. The problem is you have no idea how to do one. Your parents never budgeted, and you are completely clueless. Within this article, I hope to help you get started.

1) Track your spending! Not just your bills but EVERY penny you spend, even that quarter you give you little one at the grocery store for the gum ball machine! Use a tracking sheet or a little notebook something you can take with you all day. Every time you reach in there WRITE IT DOWN! Also have your spouse write down his or her spending. I had my husband save his register slips and I would write them all down each evening. The idea behind tracking every penny is that it gives you a clear vision of where your money is really going.

2) Once you know where your money is really going it's time to trim the fat! Look at your purchases and separate your wants from your needs. Take a piece of paper and write down wants on one and needs on the other. Go through your log....and write your wants and needs on the papers. I bet you will be surprised that your wants will not only outweigh your needs but you may need to get yourself another sheet of paper for the wants. This is where you start to make changes. Do you really need a $5 cup of coffee every morning? Do you really need to go out for lunch everyday? Just doing some simple changes can save you a TON of money.

3) Start planning your budget. Find a good budget sheet and with your tracking sheet in hand. First of all find out your NET monthly take home pay, this is the actual money you bring home in your paycheck the money you have left to spend and pay your bills with. Figure out how much per month you spend on everything This includes regular monthly bills such as power, gas and house payments. Write each amount in the budget sheet then fill in the extra stuff. Once you have the sheet all added up you will be able to see if your budget is working or if you need to trim more fat from it. Add all your bills and extras together and then subtract it from your monthly pay, the idea is to have money left over each month to put into savings. It is not easy to make your budget work but having it all written down on paper makes it real and THAT helps you realize where you really are on spending.

Next month I will write how to trim the fat and make your budget work for you while you still have money left over to do things that are fun and for yourself!