Create a Budget You Can Stick To
The economy seems to be rebounding and people may be doing a little better. But a study by Mintel, the market researching firm, says 91% of households are sticking to the tight budgets they set in tougher times. Are you? Here’s a simple three-step plan to help you stay within your budget even as the financial outlook improves.
Calculate Your Income
Budgets don’t work if you’re fuzzy about income and expenses. So don’t assume you know your income or guess at a figure. Check your paystubs for at least the last two pay periods, so you know how much you’re actually receiving after all taxes and deductions. If you work in a job that can have big income swings (think restaurant server or retail associate on commission), track your income for a couple of months and calculate an average.
Track Your Spending
Next, know what you’re spending every month. Start by keeping a daily list of expenditures. Again, don’t guess. You’re probably spending more on some items than you think (smaller, spur-of-the-moment purchases are the worst offenders). The best solution to track your spending would be to get a smartphone app – Mint’s app is a popular choice.
Draw Up Your Budget
Now you’re ready to create your budget. The goal here is to set a realistic spending plan that covers your expenditures. As U.S. News points out, you probably spend about two-thirds of your income on three categories – food, housing and transportation. But don’t forget to include miscellaneous household expenses, debt payments and optional charges (like recreation and entertainment). Once your budget is set, all that’s left is to put your plan into practice.
This budget system is intended to work in good times and bad. In the months ahead, don’t forget to check your numbers and revise your plan if you have changes in income or expenses. Happy budgeting!