Creating a personal budget is like creating a personal diet – we all know we should do it, swear we’re “definitely going to do it” this year…and then never get around to doing it.
Well, “never” ends now. These tips can help you whip your personal budget back into shape.
- Get Your Paperwork in Order
Let’s be honest – this is going to be the most tedious step on this list. Tax forms and financial paperwork are almost nauseatingly dull, but before you can get your financial house in order you need all of them “under one roof,” as it were. That means getting all your bank statements, W-2s, 1099s, paystubs, loan statements, and other pertinent financial paperwork and laying them all out in front of you (or compiling them into a Word or Excel document).
- Calculating Your Consistent Income
How much did you make last year? Was it more or less than the year before? What did you make per month – and did it vary considerably from month to month, as can be the case with freelancing jobs? Answers to all of these are essential to give you a baseline income that you can count on to be consistent and thus a figure around which you can cobble together a budget.
- Accounting for Expenses
Write down monthly and yearly expenses, including:
- Car payments
- Insurance payments
- Utilities payments
- Student loans and/or college funds
- Personal savings
- Transportation costs
- Start to Make Adjustments
Now that you have fixed figures for everything, you can start to tweak things to get your budget back into shape. Look at areas you can cut, and just as importantly, areas you can’t or don’t wish to cut. Eliminating the latter first can make the former stand out more clearly.
- Consider Investments
If you have room in your budget, consider spending some of the leftover money on investments. Any investment is a risk, which is why this isn’t feasible for those in precarious financial positions. That said, if you have the money and things go right, a good investment or two can give you modest gains, which in turn can fuel more investments and thus more money for you. A little wise investing now can help expand your budget later.
Keeping these common sense budgeting ideas in mind can help ensure this is the year you finally get your budget back in good shape.