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If you’re a regular reader of our Sands & Associates blog you may have noticed a frequently recurring suggestion: budgeting. Whether you’re already debt free or are trying to get there, having a budget that works is one of the keys to financial health. Not sure where to start? Read on for some tips to get you started.

How to Build a Budget

Add it up. First things first – tally up your take-home income. If your earnings vary month to month, budget conservatively using numbers from the months you take home less. When you earn more, you’ll have the extra funds to boost your savings. When it comes to budgeting, don’t count your extra chickens (like tax refunds) before they hatch. When you’re done with income, sort out your fixed costs like rent and car payments.

Track your spending. If you’re not sure how much you’re spending on variable costs like groceries or entertainment, you’ll need to keep track. An easy way to do this is to hang on to all (and we mean ALL) your receipts for a month and categorize them. Be sure to factor in any irregular expenses (such as an annual insurance premium) by calculating a monthly average so you can set aside those funds too.

Put it in writing. Once you’ve got your figures together, set down your income, fixed and variable costs. There are many great programs and budget worksheets you can use and personalize such as or even Excel.

Crunch the numbers. If your budget doesn’t balance it’s time to do some shuffling. Many people find that after some honest tracking, their costs outweigh what they bring in each month. Take a look through your expenses (even the ones you feel are fixed) and see where you can scale back. Or if you are committed to the costs, try to come up with some ways to increase your income.

Set some goals. Having some attainable financial goals can add incentive to sticking to a new or revised budget. Not only will you feel in control and on top of your finances but you’ll be able to see the results of your hard work. The goals don’t have to be grand, just something you can measure and, when reached, take pride in!

Check in. Once you’re on a roll with your budget you’ll want to check on how well it’s working for you. Like you did the first time, track your spending and compare it with your earnings. If the numbers aren’t what they should be try to pinpoint where they’re going off. Adjust and reallocate within your expense categories as needed and be honest with yourself.

It really doesn’t matter if a budget is big or small, just that you have one that fits your needs and can help you meet your money goals. If you haven’t worked with one before or are starting all over again, now is a great time to start!

No room for debt in your budget? Contact us to set up a free, confidential consultation to discuss your debt resolution options.