NEW YEAR- NEW BUDGETS

Budgeting lies at the foundation of every financial plan. It doesn’t matter if you’re living paycheck to paycheck or earning six-figures a year, you need to know where your money is going if you want to have a handle on your finances. Unlike what you might believe, budgeting isn’t all about restricting what you spend money on and cutting out all the fun in your life. It’s really about understanding how much money you have, where it goes, and then planning how to best allocate those funds. Here’s some things you need to help you create and maintain a budget.

1. Budgeting Basics

Do you know why a budget is so important? On the surface it seems like creating a budget is just a tedious financial exercise, especially if you feel your finances are already in good order. But you might be surprised at just how valuable a budget can be. A good budget can help keep your spending on track and even uncover some hidden cash flow problems that might free up even more money to put toward your other financial goals.

2. How to Create a Budget

The hardest part of creating a budget is sitting down and actually creating one. It’s like staring at a blank piece of paper when you need to write something and that first step seems like a massive hurdle.

3. 3 Traits for Budgeting Successs

Once you’re taken the time to create a budget, now it’s time to make sure you follow it. Budgeting can be like going on a diet—you start with good intentions, but after a few weeks or months you drift away from your plan. Don’t let that happen to you.

4. Basic Budget Worksheet

If you’re having difficulty coming up with all of the various expense categories for your budget, he is a budget worksheet that can help you organize everything. This worksheet has the common expenses and can help you keep track in an orderly fashion.

CATEGORY	MONTHLY BUDGET AMOUNT	MONTHLY ACTUAL AMOUNT	DIFFERENCE
INCOME:
Wages and Bonuses
Interest Income
Investment Income
Miscellaneous Income
Income Subtotal
INCOME TAXES WITHHELD:
Federal Income Tax
State and Local Income Tax
Social Security/Medicare Tax
Income Taxes Subtotal
Spendable Income
EXPENSES:
HOME:
Mortgage or Rent
Homeowners/Renters Insurance
Property Taxes
Home Repairs/Maintenance/HOA Dues
Home Improvements
UTILITIES:
Electricity
Water and Sewer
Natural Gas or Oil
Telephone (Land Line, Cell)
FOOD:
Groceries
Eating Out, Lunches, Snacks
FAMILY OBLIGATIONS:
Child Support
Alimony
Day Care, Babysitting
HEALTH AND MEDICAL:
Insurance (medical,dental,vision)
Unreimbursed Medical Expenses, Copays
Fitness (Yoga,Massage,Gym)
TRANSPORTATION:
Car Payments
Gasoline/Oil
Auto Repairs/Maintenance/Fees
Auto Insurance
Other Transportation (tolls, bus, subway, taxis)
DEBT PAYMENTS:
Credit Cards
Student Loans
Other Loans
ENTERTAINMENT/RECREATION:
Cable TV/Videos/Movies
Computer Expense
Hobbies
Subscriptions and Dues
Vacations
PETS:
Food
Grooming, Boarding, Vet
CLOTHING:
INVESTMENTS AND SAVINGS:
401(K)or IRA
Stocks/Bonds/Mutual Funds
College Fund
Savings
Emergency Fund
MISCELLANEOUS:
Toiletries, Household Products
Gifts/Donations
Grooming (Hair, Make-up, Other)
Miscellaneous Expense
Total Investments and Expenses
Surplus or Shortage (Spendable income minus total expenses and investments)

5. How Overspending Breaks Your Budget

The main reason to create a budget is to help you keep your finances under control by keeping track of how much money you’re spending and where it goes. When you begin to stray from your budget it’s usually because of spending too much money somewhere. But if you have a budget that tells you exactly how much you’re supposed to spend, why is it so easy to overspend? There are a number of reasons we overspend, so when you understand what causes overspending, you can help put a stop to it and keep your budget on track.

6. Try Using Cash to Keep Spending Under Control

Swiping plastic has become incredibly easy. With both credit cards and debit cards, we can be in and out with a purchase in a matter of seconds. Unfortunately, this convenience comes at a cost. By using plastic we can begin to lose track of how much money is actually being spent. Sure, two dollars here, 4 dollars there, it doesn’t seem like much at the time of purchase, but if you aren’t careful they can really add up and bust your budget. One trick to help keep your daily spending under control is to use cash instead of your credit or debit cards. It might not be as fast, but it helps you visualize just how much money you’re actually spending.