How to Build a Budget in Four Easy Steps
KEY TAKEAWAYS:
✔ Knowing where your money goes is the first step to taking control of it.
✔ Budgets are easier than you think to create and stick to.
Mindful spending can make your money go further year after year.
When you hear the word ‘budget’ you may cringe and imagine yourself filling out spreadsheets for hours. But if you think of it more as a list of guidelines to follow when it comes to how you spend your money, it’s much easier to get motivated, develop good lifelong money habits, and take the first step toward a better financial future.
4 simple steps to build a budget
Step 1: Gather your bills 
Bills can be “fixed”, meaning they occur at the same time, for the same amount, every month, such as rent, insurance or an auto loan payment. Or, they can be “variable”, meaning they go up or down depending on how much you spend, such as credit card bills.
Make a list of each type, just to see where your money is going today. You might be surprised by how much goes to things you need versus things you simply want.
Step 2: Track your spending 
It’s not always easy to cut down on fixed expenses because things like rent, insurance and auto loans are constant. However, the variable expenses on your list are within your control. How much you spend each month on things like groceries, clothing, and entertainment can vary because you always have the option of cutting back on some and avoiding others.
Your bank and credit card statements are the easiest place to view all of your debit and credit purchases. If you’re the type to use cash, you may have to start hanging on to receipts. The point of this exercise is to know the average amount of money you spend on variable expenses over the course of the year.
Once you have an accurate total for fixed and variable costs, you may want to make life easier by entering it all into a simple-to-use online budgeting tool.
Step 3: Set saving and budget goals 
Now that you know where your money goes, you can compare it to what you earn. The point of budgeting is to widen the gap between income and expenses so that you can:
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Start to put money aside as short-term savings, investments for the future, or an emergency fund.
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Use part of your income to pay down debt faster.
These are examples of financial goals that can get you on a path to better financial health. Once you set a few goals, it’s easier to find the motivation to cut down on variable expenses and stay committed to your new budget.
Step 4: Choose mindful spending 
When you have a clear vision of your financial goals and you know how your budget is going to help you achieve them, you might look differently at how you spend money. No one expects you to stop spending or to give up having fun. But before you buy something, be mindful of how it will affect your goals of saving money, building for the future, or getting out of debt.
For example, if you’re tempted to buy a new pair of shoes or sign up for a new streaming channel, ask yourself if it’s truly more important than becoming debt-free with money in the bank. That may be all the motivation you need to postpone the purchases and bank the money instead.
Need more guidance?
easyfinancial is here to support you and to help get you on a path to a better tomorrow, today. Let us know how we can help by contacting your local easyfinancial branch, or give us a call at 1-888-502-3279.
Disclaimer: This content is intended for informational purposes only and does not constitute financial advice on any subject matter.