Do you often wonder where your money is going? If asked, could you remember what you spent on food or clothing any given month? Many of us are living check to check. We pay our bills on time, thoughtfully consider any major purchases and we may even set aside money each month for emergencies. However, most people have no clue exactly where their money is going each month. They don’t have a budget.
A budget is your blueprint to how you are spending the money you earn, and allows you to assess your spending habits based on concrete facts so you have a more honest view of where your money goes each month. Keeping account of your finances will help you curtail frivolous spending, make adjustments in your savings, pay down debt and save for future goals like buying a house.
Here are three tips for creating a successful budget:
1. Take a look at a budget template.
This template will help you document your income and expenses. By identifying where you spend your money, you can create a strategy to accomplish your financial goals.
Document your spending over the course of the next month. The information will surprise and empower you. Write down your daily and monthly expenses. Daily expenses are the ways you may spend your money each day (e.g., lunch, transportation, etc). Monthly expenses are the bills you pay once a month (e.g., rent, utilities, etc.). When you are building the categories inside of your budget, make sure to budget a savings for emergency situations. It’s inevitable that appliances will break down, medical bills may come up and cars will need to be repaired. Your budget should have an emergency fund to handle life’s emergencies, so you’re not pulling away from other areas.
2. Budget in “wants” along with your needs.
Most people fail to stick to their budget because they create it so airtight that there is very little room to account for the wants in life. When we feel like we are depriving ourselves, we tend to rebel and overspend out of sheer frustration. Avoid this situation by considering the “wants” in your life, and add those into your budget, or add some “play money” that you don’t have to account for.
3. Reassess your budget often.
Life will bring many changes. In order for your budget to be effective, you should take a look at it often to see where you may be spending too much or if you can readjust how much you transfer to savings. Look at your budget every year, or after any major changes like work status, new baby, purchase of a home to make sure you can afford those choices.
Even the most frugal spender will benefit from establishing a budget. If you don’t create a roadmap to your financial success, you won’t know where you are going.
T.D. Jakes is a charismatic leader, visionary, provocative thinking, entrepreneur and compassion humanitarian with a voice that has reverberated from the world's most prominent stages. His look at life comes from the perspective of a father, a student, a pastor and a friend. His daytime talk show will be premiering this fall across the nation. Follow @tdjakesshow on Twitter!