Track your spending. Create a budget. Set a goal and of course, commit.

If someone asks you about your budget and your immediate thought is “ummm…what budget?” – never fear. This 3-step process can you get you on your way to being budget savvy.

Track Your Spending

Ever started the day with $50 and it disappear with nothing to show for it by the end of day? You aren’t alone. This is where tracking your spending can come in handy. It helps you figure out how much you are currently spending and on what. It is also a great way to begin learning how to be in control of your money – not allowing your money to control you. Yes, this means you need to track what you are spending daily. The early morning coffee stop on your way to work, $1.99. The extra snack at vending, $2.00. The super sale shoes you purchased during lunch, $60. Every time you make a purchase, pay a bill, you will write it down. It’s a good idea to do this for a month to get a good picture of your true spending habits.

Create a Budget

Now that you have a good idea of how much you are spending and where it is going, you can begin to create a budget. There are a few questions you will need to answer:

• What is your total income?
• What are your monthly fixed expenses?
• What are your monthly flexible expenses?
  • Hint: Your handy spending tracker you’ll soon be working on should help with this.
• What occasional expenses do you have?
  • This would include holiday items, birthdays, and other expenses that only pop up here and there throughout the year.

Next, you will take your total income and subtract your expenses. If your income exceeds your spending, then you might be ready to move towards increasing your savings goal or take a look at your budget to see how the money could be utilized best. If your expenses exceeded your income, review your spending. Are there any expenses you can reduce? For example, instead of spending $40 going to the movies, try renting a movie and making popcorn at home. This could be a fairly big savings, especially if this is a weekly adventure. If you have scoured your expenses and there is absolutely nothing you can adjust, you will need a second job or income. Bottom line: If your expenses exceed your income, either reduce your spending or increase your income.

Set a Goal and Commit

Once you’ve taken control of your spending, increased your income, or both, you are ready to set a new goal or recommit to an old one. You now know how much money you have to work with at the end of each month. How you choose to use this money is up to you. Of course, I recommend saving for your emergency fund first. This way you are better prepared for life’s unexpected.

When setting goals, you need to commit. Really commit. Not just a day or two, but every single day. Every action you take either brings you closer to or further away from reaching your financial goal. It’s up to you. If your commitment is in question, is this goal still important to you? If no, it’s time to set a new goal.

Use this guide to help you through the budget building process. Another great tool for tracking and maintaining a budget is this Money Management Calendar. It’s time to start tracking, establish your budget, set your goals and commit to saving money, reducing debt and building wealth. #ASW18

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