Getting Your Budget under Control
If you are like most people, your budget could use a little tightening; your credit cards need to be locked up, and your debit card could use a rest. The first step to getting your budget under control is to keep track of your income and expenses, so you know exactly how much you are bringing in and how much is going out. You can do this with software, an excel spreadsheet, or just old-fashioned pen and paper. You don’t have to get fancy; just get organized.
Write down or type in all of your monthly expenses: cable, hydro, heat, mortgage, car payments, credit card payments, and any other expense you have. Don’t forget to include your life insurance and car insurance payments. If you don’t have life insurance, that should be one of the first things you fix in your budget. Whether you think you need it or not, you should have it to protect your family. There are many life insurance companies and it is fairly simple to get a quote.
Once you have all of your monthly expenses, work on your weekly expenses. Gas for your car, groceries, dry cleaning, lunch money, and any other expenses you have. Add up your weekly expenses to your monthly expenses to get a total.
Now you have to put down all of your income. This includes salary, dividends, investment cheques, trust funds, inheritance, and any other income you have. If you get paid bi-weekly, put down a monthly figure. Subtract your expenses from your monthly income and that will give you whatever is leftover at the end of the month. If your expenses are more than your income, you need to look at either increasing your income or decreasing your expenses.
No matter how much money you have left at the end of the month, you can find ways to increase your bank account. Cut down on groceries by growing your own vegetables, or cutting out processed foods. Walk or bike instead of driving. Work out at home instead of going to the gym. Buy clothes that do not have to be dry-cleaned. These are just a few ideas that can save you hundreds of dollars each year.
One of the keys to controlling your budget is to stay organized. Keep files with all of your bills and receipts. Keep all of your insurance policies in one place so you know exactly where to find them when you need them. Be sure to keep contact names and numbers with the policies.
When you can control your budget and save a few more dollars each month, you will have a nice lump sum at the end of the year to do whatever you want. You can go on a vacation, pay some more principal on your mortgage, pay off credit cards, or put it into an investment, like real estate. Buying a rental property is a great way to build your wealth and expand your nest egg.