So you’ve never ever had a budget and don’t know where to start. Or you tried to use a budget once and it didn’t last. It’s happened to most of us.
Setting up a budget is a huge factor in getting your spending in order. If you don’t keep track of what you have and what you’re spending, your bank account can get out of whack fast.
But what if budgeting your money has failed before? Or what if your debts are so overwhelming you don’t know where to start?
Getting control over your finances takes time. Rather than trying to fix everything at once, start with baby steps. You want to have a solid foundation when creating a budgeting plan so that your work lasts and keeps you on track.
There’s a lot of info out there about budgeting, so consider this an intro to the intro. These are the very first steps you will want to take in creating a budget plan:
Make a Commitment Before Setting Up a Budget
So you’re ready to get out of debt and/or get control of your spending. How committed are you?
Compulsive spending can be an addiction. If you are someone who shops a lot or spends a lot of money on credit, you have to start your budget plan with a firm commitment to scale back your expenses and stay accountable.
- Find a friend or family member to help you. Make sure there’s someone else you can depend on to hold you true to your new budget.
- Let your friends know how important it is that you change your spending habits, and avoid people who will encourage you to overspend.
- If you tend to shop with credit cards and have gotten in financial trouble because of it, cut them up. No ifs, ands, or buts. Credit cards are not your friend if you are prone to overspending.
When budgeting your money, your success is very dependent on you and your family’s attitude. You have to want a better financial life and be willing to do whatever it takes to get there.
Know Your Income and Current Reserves
Before you create the actual budget, you have to know where you’re coming from.
- What is your monthly income after taxes?
- Do you have any savings in reserves?
- Can your income be increased?
Know Your Expenses
Write down all of your monthly expenses – everything from outstanding debts to monthly bills to things you buy just for fun.
If you have trouble remembering what you spend money on, get a copy of your bank statement credit card bills and look at where the money has been going.
Add it all up – do your expenses exceed your income? If so, don’t worry just yet. That’s very common, and even though it’s a problem that will need to be resolved, if you’ve done all the other things on this list, you are on your way to becoming more balanced in your finances.
These are the very first steps to setting up a budget. The next step is organizing your numbers so that you can start cutting expenses and keeping up with your money better. We’ll be talking about organizing your numbers in a later post.
In the meantime, if you have bills you can’t pay or expenses that have overwhelmed you, don’t be afraid to ask for help. Our experienced attorneys can help you figure out your options as you work to get your finances in order. We serve the Memphis and Shelby County area, and would be glad to answer your questions.
Photo by Trine Harritz Larsen