Face Your Financial Fears: Learn to Budget
If you’ve ever wanted to start a weight loss plan and been terrified to step on the scale, starting a budget can feel the same way. Seeing the truth laid bare means we can’t hide our heads in the sand anymore, which feels comforting but is detrimental in the long run. The truth is, we have to know where we are to know where we need to go. And here’s the good news: a goal feels much more attainable when we can break it down into smaller steps. So let’s start at the beginning.
The first step to a budget is knowing what your expenses really are.
Schedule a time for yourself to go over how much you typically owe in a month. Start with the most important, non-negotiable items that you can’t live without. That usually covers things like housing costs, utility bills, transportation costs, and any monthly debt payments. Once you know what you must spend each month, you can start calculating things that aren’t necessities but do make your life better. That could include things like monthly subscriptions, gym memberships, entertainment, etc. When you have a real number for your expenses, you can look at your income and answer the simple question: am I making more than I’m spending? If the answer is yes, it’s time to readjust your budget and make some new spending decisions.
Know your spending priorities.
We sometimes have a mindset that budgets restrict us, but if you’re doing it right, budgeting actually gives you more control. How? If you know what your financial priorities are, you’ll spend less on the things that aren’t important, and more on the things you really value. Let’s say you know you want to buy a house and get out of the renting cycle. You realize that savings for the house are a high priority for you and your family. With an accurate budget, you can decide to take what you normally budget for entertainment and cut back, using the savings to form a down payment after a certain period of time. When the moment comes to spend those savings to buy a house, you won’t have to worry—because you budgeted it for it.
You don’t have to do this alone—budgeting help comes in many different forms.
While old-fashioned pen and paper and a spreadsheet are perfectly fine ways to track your budget, for those craving a little more assistance, there’s an app for that. While everyone’s spending and budgeting needs are different, there are a few programs that people really seem to like, as seen in this article from Popular Mechanics. If you don’t think you can start budgeting on your own, or just need a little human guidance, search for nonprofits in your area that offer free financial literacy education and budgeting support.
If part of your budget includes saving for a house, give us a call. We can help you find the best option for your financial situation and help move you forward on the path to home ownership.