If you want to have a successful financial life, you need to budget and manage your money. You likely have examples in your life of people who make a lot of money, but who never seem to be able to stay on top of finances. Conversely, you might know a person or a family that seems to do very well even with modest earnings. In most cases, you’ll find the presence or absence of a sound budget makes the difference between success and failure.
When it comes to budgeting and money management, there are many variables and even more paths to success. But here are a few foundational money management tips to consider as you plan your monthly budget.
Grab a pen and paper or create a budget spreadsheet on your computer and start listing out every expense you pay each month. It may be helpful to rank them by size or by importance. This will make it easier to prioritize and potentially eliminate expenses.
Some of your costs each month will remain very similar, if not the same. Often, these are the bigger items in your budget like your housing, vehicles, insurance, school tuition, etc. These are also the expenses that often get priority.
Variable expenses are areas where it’s often easy to overspend. However, when your budget is stretched thin, these are also areas where you’ll find easy ways to save money. This is where you spend money on groceries, dining out, entertainment, fuel and utilities like electricity and water. With some extra effort and self-discipline, you can create big savings every month.
If you have extra income after you pay monthly expenses, smart budgeters will attack their debt. While minimum payments might fit under your fixed expenses, making bigger payments will eliminate your debt faster and give you more money to spend elsewhere each month.
If your income doesn’t cover your expenses, your first option is to spend less each month. However, earning more income is always an option. If you can’t negotiate a raise with an employer or get a higher paying job elsewhere, there’s always money to be made if you’re willing to take on a second job.
Observe the people in your life who have their financial matters in order and ask them for tips on how to better manage your money. And when you’re ready to dive deeper, there are countless free and paid resources available to help you bring order to your financial life.
As your financial partner, Community Bank of the Chesapeake can provide you with tools that can help you establish a budget and build financial momentum. Give us a call or come in today to for a fresh perspective on budgeting.