First Steps To A Healthy Budget

   

This is a great time to help your budget and finances get Healthy! The Holidays and all of their expenses are behind us. The beginning of the year brings a fresh look and new determination to get things in order and cleaned up. On the top of most of our New Year's List is getting our bodies healthy, but not only do our bodies need to be healthy, our budgets need to as well!

Maybe you are overwhelmed and have no idea where to start. You are scratching your head... or it's a full-blown headache thinking what do I do first?! Here are a few "First Steps" to getting to a Healthy Budget.

First Steps to a Healthy Budget

1. Know What You Make
You can't decide what you can spend until you know how much you have to spend. Setting up a budget for $5,000 a month makes no sense if you are really bringing home only $3,000 a month. Gather up the last six months of income statements and average out the monthly income. Use that number to base your budget on.

2. Know What You Spend
One of the mistakes many people make when setting up their budgets is putting down unrealistic numbers based on what other people spend, not what they specifically spend. If you have a long commute to work you will spend more on gas then if you worked from home. There are general guidelines but I recommend to look at what you spent over the last 6 months. List what you spent using categories and numbers to determine where you regularly spend your money every month. Every month will be slightly different, but it will give you an overall picture of where you consistently go and how you spend.

3. Know Your Actual Needs
When you look back at what you spent your money on, determine what your actual needs were. You obviously need a place to sleep and food to eat. But did you really need to buy Dunkin' Donuts every day for 2 weeks? Could you be saving money by brewing Dunkin' Donuts Coffee at home? There is a difference between a need and a want. Know that difference and determine what that means for your budget.

4. Educate Yourself
You invest in your future when you educate yourself. Pick up a book on finances or find a class to take online or in your community. You will find the return on the investment in education to be well worth the expense and effort. Do some research to make sure that you are not paying too much for any product or service that you have. I highly recommend Dave Ramsey's book  The Total Money Makeover
or Financial Peace University which is a class that can be found in your local area.

5. Stick To The Plan
The problem with budgets that fail is that we have failed to keep them. It is not easy to stick to a tight budget at first. Keeping track of every dollar and penny can be overwhelming and even a little annoying. But you will find that in the end you will reap amazing results from sticking to the plan. Make the small sacrifice of being a little tighter with your money to be able to have the freedom to accomplish bigger dreams in the future.

What are you doing to get your Finance's Healthy in 2014?