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Budgeting Advice

A simple way to manage your money is too create a budget. A budget keeps record of how much money you have coming in and how much you have going out. Ideally, your income will be higher than the outflow, but if it's not, you either need to make more money - such as through a second job - or cut back on your expenses. Learning how to manage your money properly is an essential step to helping deal with debt issues or to prevent getting into debt.

The first step in creating a budget is building a written baseline.
Start by keeping a simple monthly log of income and expenses. There are numerous free templates and money management software applications available online, but start simply: Don't make it so complex that you won't want to stick with it - your system can be as simple as a lined pad and a calculator. Whatever works for you.

Write every expenditure down.
You may need to jot daily expenditures down on a calendar. Small incidental items such as a coffee and a doughnut or a stop at the drug store can be easily forgotten, but collectively can add up to significant expenses. File your expenditures in a few major categories, such as essentials (food, shelter, clothing, taxes, insurance, utilities, transportation, debt repayment) and discretionary items (entertainment, furniture, travel, hobbies, incidentals). Going through the process or recording your expenses is not only good budgeting advice; it is an essential part of learning how to manage your money correctly.

Analyze your expenditures and set goals.
Once you get a sense of your income versus your expenditures, you can analyze your expenditures to see exactly where your money is going. Ideally, your cost of living and essentials shouldn't eat up more than 60 or 65% of your income, leaving you some reserve for discretionary spending and to allow you to budget for emergency funds and savings for long term goals. If your expenditures are out of whack, you will need to see where you can cut back. Your first focus should be on paying back any debt. Then, look at each expenditure and evaluate its importance - could you eat one less lunch out a week and pay off your credit card bill sooner? Could you read the daily paper at work or online, and fatten up your emergency fund instead?

Set goals for how much you want to set aside for long-term goals like retirement or funding your kids' tuition, and short-term goals for things you would like to accomplish, like taking a major trip or adding an extension on the house. Think about some of the achievers you have admired in your life: they are always motivated by and working to a goal.

Readjust your goals periodically.

Life is dynamic so your goals will change. When you get a new job, a new home, or when the kids finally move out on their own, it's time to readjust your budget and set new goals. As with any other endeavor, it's worth stretching a bit to attain and exceed your goals.

Check Out These Resources for Additional Budgeting Advice:

Money Tips for All Ages: Your Finances at Different Stages of Life.
MyMoney.gov
Smart About Money
My Money Management

* Individual results for each program may vary based on ability to save funds and creditors willingness to negotiate. Program does not assume any Debt or provide credit score assistance. Program not available in all states, so please review all terms and conditions of program prior to enrollment.