With ‘2014’ in full swing, it’s time to get some things in order, financial order that is. Countless bills mount on a day-to-day basis, do you know how to budget your money to see results? If so, pat yourself on the back, because you are ahead of the curve.
The “B” Word: Budget
Question: What is your budget IQ? Suffice it to say that many struggle in this arena. Some say it’s not how much money you have, but what you do with your money that actually counts. One thing is for sure, whether you are a millionaire or just living from paycheck-to-paycheck, it helps to know the most efficient ways to budget your money.
Budget, Budget, Budget Some More
Most of us have operated and ran a lemonade stand when we were children; hence we had a brief introduction to money at that time, because we took care to make sure every ounce of our cash ended up in the appropriate place, be it lock box or change jar.
But, what do we do to mind our coins at our current age? Take stock of every dollar, quarter, dime, nickel and penny that is being spent. By becoming aware of your spending habits, you can have more money in the bank.
It also can be useful to invest in a planner, journal or notebook to record your expenses. No, completing your budget on a single sheet of paper just won’t do. The idea is to have something that you can review as needed, papers get lost too easily and may inadvertently get tossed in the trash come garbage day. Only you know what can be the best way for you to track your expenses, daily, weekly or monthly, even. Just so you develop the habit of reviewing your spending habits. Seeing the causes and effects of your spending can be a real eye-opener.
It pays to have money tucked away for a ‘rainy day,’ such as when the car breaks down. ‘Rainy day’ funds can minimize the amount you have to charge on your credit card in time of need, thereby decreasing the amount that will be owed at a later date.
How do I start my ‘rainy day’ fund? According to several bankers, the best thing is to start small by saving an amount that you won’t miss and then increase this amount as more funds become available. For example, you can start saving $50.00 every paycheck, then increase this amount to $100.00 or any other amount you choose. Depending on how often you get paid, this may mean an extra $200.00 in your savings account per month or an extra $2,400 in the bank annually. With a larger bank account, will you really miss not having those extra items? Remember: It is suggested that between three to six months’ worth of expenses go into a ‘rainy day’ fund.
Assets is a term that gets thrown around a lot in the financial world. So, consider building your assets, too. Assets are items of value that you own. In other words, they are items that has exchange value. You can build your assets in two ways; this can occur by saving money and paying debt down, as well.
Practice Makes Prefect
It’s important to remember not to become discouraged, if you miss your monthly budget goal. Saving money has to be done on a continual basis and may take time getting used to in the beginning, in order for it to become a seamless practice. Another point to mull over is the money you are saving may not accumulate as fast as you would like, but stick with it and you will eventually achieve your desired outcome.