A budget serves as a road map for your spending,
helping you find ways to save more money for your financial goals.
For a one-month period, keep track of every dollar you spend,
whether by cash, check, or credit card. Break down those expenditures
by category and total them for the month. Are you surprised by
how much small expenditures add up over a month? Did you realize
how much you were spending on things like dining out, clothing,
and impulse purchases?
To make sure you get the maximum benefit
from the budgeting process, keep these points in mind:
- Use spending categories that make sense
for your spending patterns. If there are areas with good potential
for spending reductions, even if the amounts are relatively small,
set them up in their own categories.
- Set up enough categories to give you a
good feel for your spending patterns, but not so many that it
becomes difficult and time consuming to monitor your progress.
- Include nonrecurring items in your budget,
such as gifts, tuition, insurance premiums, property taxes, etc.
- Periodically compare your actual expenditures
to your budgeted expenditures to find out where you are having
problems.
- While everyone in the family should have
some cash that can be spent without accounting for it, don't
make the amount so large that it detracts from your savings efforts.
- Include savings in your budget and make
sure you actually save that amount every month.
- While at times a budget may not seem worth
the effort, remember that it is a tool to help you accomplish
your financial goals. Remain committed and stick with it.
