Tips for an Effective Budget

Are you faced with endless credit card bills, notice of foreclosure or looking for loan modification? Letting finances get out of hand is easy and, for some, an all too real reality.

Everyone “has a budget.” Few people stick to it and they’re left wondering at month’s end, “where is all my money?” One key to financial stability to spend well, another is knowing what you have (or will) spent on. Below are some tips to a workable budget.

Write it down: Sit down with a pen and paper (or Excel if you’re so inclined) and write out every known expense you can think of—car, rent, mortgage, loans, phone bill, etc. Once you’ve got it totaled up, look at how much you spend in just static expenses vs. how much you bring in.

Set up a calendar: knowing when your bills are due will help determine when to pay what. Aside from letting you know the next one on the horizon, it also allows for creative budgeting in the event of an emergency.

Use cash whenever possible: debit and credit cards are easy to swipe and for some reason we don’t suffer the same mental reluctance to do it. Cash by contrast is usually harder for people to spend. Also, it will be apparent when you’re running low.

Keep record: Write down what else you spent money on. Add up receipts daily to find out where you nickel and dime yourself. It’s eye opening when you discover you spend $15 on miscellaneous stuff every time you stop at a gas station.

Plan for emergencies: It’s a good idea to set aside whatever extra cash you have at the end of the month into a separate account. This slush fund can be for emergencies like the A/C going out, car transmission, or just vacation money if nothing comes up.