Track Your Spending
Before you can create a realistic budget, you need to get an accurate picture of where exactly all of your money is going. Spending $5 on a coffee each day may not seem like a lot, but added up over the course of a month can be costing you $150 a month. Of course, this doesn't mean you need to stop drinking coffee, but maybe just limit the amount of time per week you're purchasing it from your favorite place. A great substitute is making it at home, and utilizing any that may be provided throughout your day; at work, for example.
Start With Big Items & Goal ITems
Some of your expenses are inflexible - at least at the moment - such as a rent, mortgage payment or car payments. On the other hand, you might be able to renegotiate some of those things to get a lower payment or consider moving into a less expensive place. For the moment, however, you want to look at what your financial goals are, such as saving or investing and then budget for your non-negotiable expenses. Anything after that you can consider negotiable. If you want to save $200 a month, but make $2,500 a month and have $1,700 in non-negotiable bills, then you are going to have to cut down your other expenditures to $600 a month or find a way to raise your income level.
Tweak Your Budget as Necessary
What works on paper does not always work in real life. A budget should always be more of a work in progress than set in stone. As your income changes, so will your budget. Sometimes, you may have a surplus of income and having a budget will help you spend it more wisely. Other times, you may have to cut some expenses, so a budget will help you make the right cuts in the right places, even though they may be painful.
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This article was originally published on matthewlittlemore.net