How much you spend a month is a question most individuals can’t answer and it is a crucial step to creating a budget to help you limit your stress. A survey done by capital one “Mind over Money” revealed many scary features about people’s money situations.
It showed that 58% of Americans feel that finances control their lives and that 68% believe they won’t have enough money to retire. Just like anyone else you have thought about money at one point in your life that is why steps to budgeting could be beneficial for your future and stress levels.
Some advantages that budgeting can create are an aid in paying off credit cards, establishing an emergency fund or even saving for large purchases such as homes.
Even if you have a perfect situation currently it is always great to have control over your finances to prepare yourself for a rainy day. Here are some steps you can take to start budgeting.
Calculate your current monthly income considering your main job, side hustle, or any other income that you bring in every month.
Most of us won’t be able to name all the expenses we currently have and it is essential to track and categorize all your expenses giving you an idea of your financial situation.
Determine the pure necessities you need to live such as rent, gas, and insurance, and split them form entertainment. Then allocate your monthly income accordingly.
Once you have an idea of what your expense is it's time to determine your financial goal such as whether are you looking to save for a down payment, get an emergency fund, or pay off your debt. Set a goal to aim for helping you keep track of focus. Focus on setting short and long terms goals.
Start with your income, after expenses, and begin by allocating an amount to each of your goals or expenses, helping you create a plan. This may involve limiting the amount of entertainment you have each month or finding ways to save money to improve your financial situation.
After starting to create a budget to improve your financial situation, make sure to set aside some time to review your monthly income and expenses. This will help you determine if you need to make any adjustments to reach your goals faster or to ensure that you are on track.
Don’t fall into the trap of living paycheck to paycheck. Be sure to follow these steps or find something that will work for you to help establish a budget that can assist you in achieving your short or long-term goals.
Use budgeting to your advantage by providing you with the funds to finally purchase the house you’ve always wanted or to get out of debt, helping you stress a little less.
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