Step 1: Find the Fat
Track your spending habits for at a month using a notebook or apps like Lemon Expense or Spendee. Document every penny you spend from that $4 cup of coffee you buy every morning to the afternoon snack you purchase from the vending machine.
“The most important component of budgeting is knowing where your money is going.”
~ Tamra Jackson | Certified Public Accountant | Maryland
Most people don’t realize that their morning stop for coffee adds up, says Tamra. For instance, if you spend $2 each weekday on a cup of joe that adds up to $10 a week. Over the course of a year, that’s $520 that could be added to your savings or used to reduce your debt.
Step 2: Compile Your Financial Data.
Make a list of every bill you have from your mortgage to your utilities, as well as their due dates. And, don’t forget your annual bills like homeowners’ insurance and property taxes. This will help you pay your bills on time, plan for expensive annual bills, and eliminate late fees.
Step 3: Set a Goal
You must set a goal in order for your budget to succeed. Determine how much money you want to save, how long it will take you to save it, and plan accordingly. Setting a goal will help keep you on track with your future plans, whether that’s buying a new car or early retirement.
Step 4: Stick to Your Game Plan
Budgeting can often feel like a diet, and like a diet you can fall off the wagon and revert back to old habits. Stay on track by using the apps mentioned earlier in this article.