Manage Your Money Better With A Budget

 

       Do you have
financial goals in life? Maybe you want to buy a house or get out of debt. If
you need to achieve any financial goals, you’ll need a budget to get you
there. 
A personal or business budget is a
way to track your expenses and income for a set period, monthly is the most
common. Don’t view budgeting as negative but as a means to achieve financial
goals. Bear in mind there are multiple ways to make and keep a budget. Here are
a few steps to get started.

Step 1.
Find and Gather all Your Financial Paperwork

You will
need:

·        
Bank
statements

·        
1099s

·        
Recent
utility bills (electricity, water, gas, etc.)

·        
Monthly
bills (mortgage, car, Netflix, student loan, etc.)

·        
Any
receipts for the last three months

·        
Paystubs 

The more
information you have the better so you know where your money is spent. This
gives you a monthly average and a starting point.

2. Add Up
Your Income

How much is
your monthly take-home pay on average? If you have income such as Social
Security, stocks, pension, etc. that’s income. The best rule to follow is to
use your net income when finding your average monthly income. You may have to
go back three months to get an average.

3. List
Your Monthly Expenses

These are
all the expenses you have each month. For example:

·        
Mortgage
or rent

·        
Savings

·        
Insurance

·        
Car
Payment

·        
Utilities

·        
Groceries

·        
Childcare

·        
Gas

·        
Credit
Card Payment

·        
Dining
Out

If you spent money, then it’s an expense. Use online banking,
bank statements, and receipts to track your spending.

4. Find Your Fixed and Variable Expenses  

These two types of expenses are easy to determine. A fixed
expense is something you pay the same amount each month. The best example is
your monthly car or rent payment. A variable expense will change monthly as
gas, groceries, eating out, utilities, etc. It’s best to find an average for
each variable cost so you can know how much to estimate for each cost.

5. Add Up Your Monthly Income and Expenses

This is usually the shocking part of making a budget for
people. Don’t be surprised if your expenses are more than your monthly income.
If your expenses are more than your income, you are likely overspending and will need
to adjust your spending habits.

6. Adjust Your Expenses

Now, you know what your average expenses are you can start
looking for areas to trim or cut out completely. You can pack your lunch
instead of eating out at work. Hit the sales rack instead of paying full price.
You will be surprised where you can trim or cut expenses. It takes discipline
and time to change how you spend money.

7. Set Up Fun Money

Give yourself a little fun money to spend without feeling
guilty about it. You could use it on dinner out or that watch you’ve been
wanting. Keep this part of your budget reasonable, don’t overspend.

8. Pay yourself First

When you get paid put money in a saving or rainy-day account.
You want to build a nest egg so you can build wealth over time.

Setting up and sticking to a budget is will
take time, effort, and energy. It could take anywhere from two to five months
to get a budget working for you. You will need to track and keep up with what
you spend your money on. A budget is a living document that will need
adjustment each month. Take the time to make your budget now so you can achieve
your financial goals. SWVA Tax & Accounting is here to help with all your
financial needs. SWVA Tax & Accounting is a full-serve accounting firm that
specializes in the needs of small businesses. Call us at 540-250-3198 or book
online
to get started today. We’ll run the
numbers, while you run the business. 

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