Ever gone to make a purchase, then oops, there’s not enough money left in your account?
It happens to the best of us, but creating a budget is a great way to avoid such situations.
First thing’s first, let’s figure out where all that money is going. In order to do that, start writing down everything you’re spending money on. Keep a notepad with you, or track it in your phone for at least a week. Be certain to record every purchase, even those $2 breath mints you picked up on impulse. Every penny counts. This will expose where you are thoughtlessly spending on things you probably don’t need. From there, you can look at the big picture and start identifying what you should and shouldn’t be spending money on. This also helps to educate you on how to start using your money as a tool to help you achieve things in life as opposed to just something you need to function day to day.
Differentiate between those things that make life extra fun or comfortable – your wants, and the things that are basic necessities – your needs. It may help to sit down and make a two column list of “wants” and “needs.” Then, using your spending tracking notes, put everything into the appropriate columns. You will find that there is a lot you can cut down on, and you probably never thought about it before. Adjustments such as packing a lunch at home instead of eating out is not only healthier, but much more budget friendly.