FINANCE

Using a Budget to Reach Your Goals

Many people think only those with low incomes or money trouble need budgets. The fact is, if you spend money, you should have some sort of plan for managing that money — and that’s all a budget is. The details may be different for everyone, but without some kind of plan for how you spend — and save — your money, it’s hard to achieve your financial goals.

Think about your situation. What are your financial goals? Are you saving for education or for retirement? Are you buying a new home or improving an existing one? Paying for a vacation? Consolidating debt? A good budget can help you achieve those goals.

The first step in budgeting is to track your current income and spending by listing everything you earn or spend each month. This can be done with paper and pen, on a computer spreadsheet, or on one of the many free online budget calculators. But be sure to track every penny you spend, from your mortgage payment to that morning latte. The more you know about your spending, the better you can plan.

Once you’ve charted your current spending, consider each item and identify areas where you could save. Are you paying for premium channels that no one is watching? Are you taking advantage of all the discounts and preferred offers that your AAA membership affords? Cutting expenses and maximizing the value of every dollar you do spend are both key.

You should also get in the habit of planning ahead for major expenditures. That means establishing a monthly savings amount that you pay the same as you would one of your bills. If you already have existing debt or an unexpected need catches you short on cash, it may mean making use of a loan or line of credit. Just be sure the lender is reputable and the payment is one you can afford. 

 
By taking the time now to create a plan for yourself, you can take charge of your finances and make your goals happen.

Photo by Marilyn Nieves