There are likely a million and one ways to spend less on the things we need, to discover the joys of cost-free entertainment and experiences, to increase the return on our investments, and to develop a sense of empowerment and a healthy attitude towards money. Those are all topics I’m anxious to write about and explore further, but they will all be ineffective for those without the solid foundation that is a well-formed budget.
A budget is your guide to reaching financial goals; mapping out your weekly, monthly, and annual benchmarks that will keep you on track with your long-term plans. The prospect of sitting down to create a budget may be daunting to some, but the great thing is that once you have crafted your budget you can relax knowing that you have a well defined path to financial success. If you start feeling discouraged about your finances and think, “I can’t do this – I’m in over my head”, you can look to your budget as a reminder that you CAN do it. You have written proof that your goals ARE attainable.
I’ll be diving into the specifics of creating and honing a budget in future posts. Now is the time to brainstorm a list of all the expenses you have in your life, right now. Be objective and honest. You’ll want your budget to be detailed enough that everything you’re currently spending money on is taken into account – even those things that you are looking to cut out of your spending habits like costly trips to the manicurist or daily stops at the 7-Eleven. Understanding where your money is going now is key to developing a budget that will work for you and your priorities. One easy way to do this is to look over a month or two of history on your credit and debit card statements. If you pay for most things with plastic, this will give you a really clear picture of how much you spend on what. If you’re still not sure where your paychecks are going, make a log of everything you purchase over the next couple of weeks.
Below is a list of common budget items that can help you get started or fill in gaps with expenses you may have missed – print it off and jot down next to each item what you currently spend on each. Don't forget to stop by tomorrow when we'll explore how to translate what you learn from this exercise into a budget that is tailored to you. I'll also be sharing some wonderful web-resources that make developing a digital budget a breeze!
Rent or Mortgage Payment
Utilities – Electric, Gas, Trash, Water
Public Transportation Pass
Prescriptions and Medical Expenses
Personal Care - Salon Visits, Massages, etc.
Eating Out and Drinking
Entertainment – Movies, Dancing, Concerts, Shows, etc.
Gym and Club Memberships