| Where does the idea of sitting down a coming | | | | Thanks to your software program, you've just |
| up with a personal budget rank on your list | | | | discovered how much per month you drop on |
| of "things I can't wait to do"? If you're | | | | those gourmet coffee drinks you love so much, |
| like most people, it's probably somewhere | | | | great. But now what? Now you need to set some |
| between jabbing a fork in your ear and | | | | goals for yourself. |
| getting a root canal. Can't say we blame you, | | | | |
| devising a budget for yourself is definitely | | | | Don't be shocked if your report says you're |
| not the most stimulating activity in the | | | | spending more than you earn. It seems |
| world. But for financial well-being, it's an | | | | unfathomable, but Labor Department statistics |
| absolute must. It needn't be too painful | | | | show that many families who make less than |
| though. With today's technology, | | | | $50,000 are spending a bit more than that |
| budget-making is pretty much a snap. Just | | | | annually. If you're one of them, it's time to |
| remember, the goal of creating a personal | | | | slash your spending. Even if you're not in |
| budget is threefold: 1) to list your | | | | that boat, there are still probably a few |
| expenses, 2) to set future goals, and 3) to | | | | expenditures you can do without. |
| cut costs to meet your goals. | | | | |
| | | | As a general rule, you should reduce your |
| Where does your money go? | | | | spending to 90 percent of what you bring in. |
| | | | The rest of that money should go into savings |
| The first part is always the hardest when it | | | | and/or investments. |
| comes to starting a budget. You need to find | | | | |
| out where your money is going on a monthly | | | | Slash and Burn |
| basis. You could dig into bank statements, | | | | |
| credit card receipts and check ledgers, then | | | | Upon further review of your budget, some |
| hand write every expense you come across on a | | | | cost-cutting measures will become painfully |
| sheet of paper. That's one way to go. The | | | | obvious. Eating out and other entertainment |
| other, simpler way is to use the amazingly | | | | costs will probably stick out the most. |
| intuitive personal finance software that's | | | | Expensive clothing might be another. Search |
| available today. | | | | for those small, trivial costs that you can |
| | | | do without and eliminate them. You won't miss |
| Programs like Quicken and Microsoft Money | | | | them. |
| were built to help you track your budget. | | | | |
| Simply input your expenditures, divide them | | | | While the little things can kill, there are |
| into categories (e.g., auto, food, clothing) | | | | also bigger costs you can probably reduce. |
| and subcategories (e.g., fuel, dining out, | | | | Take a deep, long look at your lifestyle. Is |
| shoes) and boom-the program will spit out a | | | | your car a little too luxurious for your pay |
| detailed report of your monthly income and | | | | scale? Are you dining at five-star |
| expenditures. | | | | restaurants a little too often? Are weekend |
| | | | getaways becoming routine? If so, cut back. |
| An even easier way to track your budget is | | | | It may not be pleasant, but it's necessary. |
| through online banking. Most banks offer a | | | | |
| service where you can download past account | | | | Finally, take a look at things like your |
| activity and plug it directly into a finance | | | | bills and taxes. If the mortgage you're |
| program. It some cases, it'll even categorize | | | | currently paying is two or more percent |
| your spending for you. How easy is that? | | | | higher than what's available, look into |
| | | | refinancing. When it comes to filing your tax |
| What are your goals? | | | | return, make sure you're maximizing |
| | | | reductions. |