Financial Tips
How to Save Money : Creating a Household Budget: First Steps
A good household budget will help you get control of your finances and begin a serious effort at debt reduction. Following these seven steps, you can create and maintain an accurate budget:
List your income. Identify all your sources of income. You should note which are routinely paid to you, such as your salary, and which occur at certain times of the year, such as income tax refunds.
Identify your expenses. Create a completely accurate list of your monthly expenses. Resist the temptation to leave anything out; in the long run, you are only deceiving yourself. In addition to the obvious expenses, such as car payments, utility bills, and credit card bills, include how much you spend at restaurants, or at hair salons. Start keeping receipts for everything so that you can improve this list.
Set realistic goals. Okay, now you know how much you’re spending on, say, groceries. How much do you want to spend? Set some reasonable short-term and long-term goals for each category of spending.
Think of the future. Set aside some portion of your income for a savings account each month. While 10% of your income is a good rule of thumb, it’s more important to begin the habit, using as much as you can spare.
Get rid of debt. For many people, debt reduction is a major argument for keeping a household budget. Pay down as much of it as you can each month – and try not to run up any more! The best part is that as you pay down debt, you’ll free up more money and make it go away even faster.
Be reasonable and flexible. Don’t expect you’re going to make everything magically work in the first month. It’s a map, and you may still make wrong turns. Try different strategies from month to month to see what works best.
See how you’re doing. Compare your expenses to your household budget every month. How did you do? How close are you to your goals? You’ll be surprised how quickly this comparison will start to provide you with fresh motivation each month.
If you’ve taken these steps and still aren’t satisfied with your progress, or if you feel swamped by debt, consider turning to the consumer credit counseling professionals at Credit Counselors. They can work with you to create an effective household budget, if needed, begin a debt reduction management program, and set goals for your financial future.
