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Jun 27

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Budget 101 – Class 2

Congrats – you passed step 1! Okay, now that you have a budget sheet, all your bills, and paychecks ready, let’s move on to plugging in those numbers.

  • First, determine what dates your bills come on and assign each paycheck to a bill. For example, if you’re paid on the 15th and 30th of each month, you’ll know that your credit card on the 19th comes from your 15th check and your mortgage on the 5th comes from your 30th check. According to your pay period, make a plan that works for you. In order to be successful, it’s so important to have a plan and make a conscious and determined effort to stick with it. You should know where every dollar of your money goes!
  • Next, determine if you have more money going out than in. If this is the case, you need to make some decisions on where to cut back. Some easy items to cut back on would entertainment and dining out but you may find other areas that make sense for your family as well. Spending more money than you make simply isn’t an option for success.
  • Remember that adding to savings is important and should be considered an expenditure. Even if you’re committing only $5 a month at first, that’s a step in the right direction. Your main goals should be paying off debt and adding to savings. For other tips on debt, head here.
  • Take all your bills and plug them into your worksheet. Some items you’ll know the exact amount every month such as your mortgage/rent and some you may have to average out based on past bills. Do your best as you’re starting out to plug-in a figure and you can always tweak it later if need be.
  • Now, when you balance your checkbook and pay bills, you should have your budget handy and plug in those numbers. The great thing about the sheet I use is that it automatically updates every number for me. On payday, I sit down and first add the check that came in. Then I deduct every bill I am paying for this period. I make sure that all my receipts for groceries, etc are entered in the appropriate columns and that I’m where I should be for the month. It doesn’t really take that much more time than if I were just balancing my checkbook and paying the bills and it’s great to have a visual aid of all the amounts.
  • Now that you’ve seen the numbers in black and white, make a conscious decision of your goals but also be realistic. If you’re too over the top, you’ll become discouraged and are more likely to give up. Decide what debts you’re working to payoff and when you’d like to be done with them. Set an amount you’d like to see in savings by a certain date and for a certain reason such as a vacation or college fund. Once you have goals and dates in place, it’s easier to work towards them and feels more attainable.

So ta-da! That was painless, right? Now stick to it and you’ll be amazed watching your debt dwindle and your savings increase!

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