According to a 2013 Gallup poll, only 32% of Americans use a budget. We’ve all heard about budgets, yet our minds trick us into thinking budgets are restricting and limit what we can do, but they’re not. Creating a budget can be freeing and it’s easier than you think.
Take a realistic and simple approach to your financial awareness. Grab a pen, paper, and follow these steps.
First, write down your monthly bills.
Second, write down your actual take home pay. This is after your tax withholding and benefit deductions are removed from your paycheck. Don’t use your annual salary, that is not what you’re actually taking home.
Third, identify and write down your annual expenses like vehicle insurance, plates and taxes, life insurance, etc….From here:
Add up all the expenses for the year. Then, add up your total income for the year. Compare the two numbers.
Where do you stand? Are your expenses more than your income? If you have money left over, are you using it in the best way?
The biggest payoff by having a budget is having a stronger understanding of your finances, which will ultimately help you identify potential problems and opportunities for improvement.
Now you know how to make a budget, pretty easy huh?
Disclaimer – Information contained herein does not involve the rendering of personalized investment or financial advice, but is limited to the dissemination of general information.