Taxes filed, now what?
1. Track your spending for a month
Before you can start a budget you have to know how much you have and, almost more importantly, how much money you spend in a month.
Take a month to monitor your spending. You can get an app for your phone, a spreadsheet for your computer, or you can just do it the old-fashioned way and write it down on paper.
Whichever way you choose, it's critical to know what you're dealing with so you can establish a budget you will stick to.
2. Prioritze your spending
While you're monitoring your spending habits, separate purchases into categories. For example, mortgage/rent, utilities, car and gas bills, etc can be housed under "must pay."
Put food in another category, and entertainment and other expenses into another.
Once you have spending sorted into categories, prioritze your bills. Look for stuff you can cut out and eliminate all together.
3. Make the hard calls
When deciding what to cut out of your monthly spending, if you're serious about saving money, you're going to have to make some tough decisions. Do you need at $200 cable bill, or is there a way to cut back or eliminate it altogether?
Saving money isn't easy, and you're going to have to give up luxuries, and even some necessities, if you're going to get your finances in order.
4. Tackle credit card debt first
If you are in a pinch financially every month due to credit cards, then saving money is out of the question.
Try debt consolidation or shifting the money you'd spend on luxuries and others things you cut out of your budget towards reducing your credit card debt. Credit card debt can put a crunch on a monthly budget real quick.
5. Balance your checkbook
When creating an effective budget, you have to monitor your spending regularly. A good way to avoid overdrawing your account is to make sure to know how much money you have.
A good tip is to go ahead and write down automatic payments that might be coming out later in the month instead of waiting for the payment to process. This will keep how much money you have to spend in persepctive.
A big mistake some people make is that they don't account for future payments that month. When they look at their statement, it often seems like they have more money than they do, which is tempting to spend. Don't. Track all your payments at the beginning of the month to give you a better sense of what you're working with and how far you need to stretch it until the next pay day.
Creating and keeping track of a monthly budget is a difficult habit to form, but if done properly and consistently, it can mean the difference in having a few bucks to save at the end of the month or scraping by until the next pay day.