Spring Cleaning for Your Budget

Simply put, a budget is a list of planned expenses and revenues.  It is a plan for both saving and spending.  A balanced budget is crucial to avoid the negative side effects that an unbalanced budget brings: stress, overspending, unpaid bills, poor credit rating, marital problems, etc.

If you currently have an unbalanced budget then there is a simple solution to your problem: a personalized budgeting plan.  Remember, “budget” is not a dirty word. Having a budget does not mean that you have to do without.  A budget is actually a way for you to get what is really important to you such as a home, reliable transportation, vacations, even a debt free life.  No matter how much or how little you get paid you will never be able to get ahead if you spend more than you earn.

The first step towards a balanced budget is to complete a budgeting worksheet.  Go to www.hope4usa.com/contactus and request a free worksheet.  Begin by making a list of all of your monthly expenses (i.e. mortgage/rent, car payment, insurance, utilities, groceries, etc.).  Next, list your total monthly income (i.e. paycheck, child support, etc.).  If the total monthly expenses (money spent) equal more than your total monthly income (money earned) then you have a budget shortage which needs to be fixed.  

The ultimate goal is to get your monthly budget to a place where you have a surplus (more monthly income than expenses).  If you currently have a monthly budget shortage, then here are some great tips to use:

Step 1 - Assess “wants” versus “needs”

A want is something that you potentially could do without (i.e. dining out, excessive shopping, entertainment expenses and cable.).  It is not necessary to cut all wants from your budget; however, it is important to know which of your current expenses are wants, so that you can evaluate how you are spending your hard earned money and whether or not you need to make any changes in your spending habits.  It is also possible to simply cut back on the spending in your wants category and not necessarily eliminate a want all together.

Step 2 – Decrease bills in the “needs” category of your budget

Certain items in your budget are considered needs.  Rent/mortgage payments, vehicles, insurance, utilities, medical expenses and existing debt fall into this category.  While needs cannot be eliminated from your monthly budget, it is often possible to save money in this category as well.  You might save money on your needs by refinancing your mortgage or vehicle, getting cheaper auto insurance, deferring student loans, or requesting a reduction in your credit card interest rate. Having a “pay-down-my-debt” yard sale or temporarily getting a part time job can also help you to reduce the amount of existing debt you owe making your monthly bills more affordable.

Deciding to balance your budget is a big step and can seem overwhelming at first.  However, once you start to see the benefits that come from a balanced budget, the process suddenly becomes very worthwhile.  So make a budgeting plan and determine to stick with it no matter what.  Your dreams of homeownership, debt elimination, and a life free from every day financial stress can absolutely come true.

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