Steps to Creating a Personal Budget
By April Lewis-Parks
It takes 21 days to build and keep a habit. This is a great thing to remember when starting and maintaining a good financial personal budget. How and what you choose to spend your money on will dictate the outcome of how minor or major your budgeting process will have to be. One thing for sure is that many Americans lack the money management skills needed to keep their finances under control.
So here are steps that you should follow when creating your personal budget:
Track Your Spending
The first thing that you want to do is to track your spending and income for one month steadily. Make sure that you record every, single purchase no matter how small. Also don’t forget to include atm/bank fees. Remember that being on a budget doesn’t mean that you have to live as a hermit, it just means that you have to cut back some on your monthly expenses, while better allocating your money. So instead of going out to dinner three times a week, stay in and cook and go out once a week.
Budget Your Priority Spending
This is a very simple step. All you have to do is create a list of your monthly reoccurring expenses. This includes but is not limited to rent/mortgage, groceries, utilities, car/travel fees, and clothing. Remember that these must be a part of your monthly budget statement.
Paying with Cash Over Credit
With the popularity of credit and debit cards, it is very easy to overspend and get off budget. With an exception to mortgage and car payments, consumers who are budgeting should create a strict no plastic policy while paying for groceries, clothes, vacations, and other nonessential items. This also includes relying less and less on ATMs.
Feel Free to Make Adjustments
If you’re budgeting results don’t cohesively match your expectations or financial needs, you may have to rethink your overall personal budget plan. Your budget will change depending on your overall goals. Be sure to make sure that you leave your budget as comfortable as possible to make sure that you stick to it.
Don’t Set Yourself Up to Lose
One of the major parts of budgeting is being able to make certain financial sacrifices. But if your budgeting restrictions are set too high, you will be more likely to stop following the budget. No one wants to stick to a budget that takes all of the fun out of their lives. Failure is not an option as you don’t want to be discouraged when it comes to managing your finances.
April Lewis-Parks has more than 15 years of experience in the financial sector, she is a certified financial counselor, and a consumer affairs advocate. As the director of education and public relations for Consolidated Credit she is dedicated to generating awareness about personal finance issues and acts as their consumer affairs advocate. As host the of MissMoneyBee.com, she promotes financial education and offers timely and informative personal finance articles to educate the public. April’s promotional efforts can be seen in past issues of the New York Times, Washington Post, Newsday, Consumer Reports, the Business Journals, Money Magazine, Glamour, Cosmopolitan, Family Circle, among others. Connect with April on Google+.