Making a Plan For Your Money: A Budget

Thanks for viewing my first blog. I look forward to providing my readers with the skills to become free of debt and on the road to success. Please bookmark this page since it will be updated with important tips and guides.

Finding out where you spend your money is an important first step in becoming financially secure. During the next month make it your duty to write down every purchase you make. You will be amazed at some of the pointless purchases you make in your day to day spending. If you say “I know where I spend my money, I don’t need to write all my purchases down,” please just write everything down for fun. I have a brother who was in some financial trouble. I was telling him to write all his purchases down, but he thought he knew his money was going. He unwilling did what I asked and couldn’t believe where some of his money was going. Just about every morning he stopped to pick up a coffee before heading off to work. He lived in a city and it was easy to find a coffee shop on just about ever corner. On his lunch break he would pick up something at one of the cafes across from his job. Literally hundreds of dollars were leaving his wallet each month for purchases that he didn’t need to make. He was surprised at all the hidden costs he found. Coffee costs an average of about $7 for a can that will make him plenty more then the $3 cups he bought every morning. After you see where your money is going, you build a budget. Many people are scared when they hear the word budget, but once you stick to a budget plan, financial freedom will come much quicker. A budget limits the amount of money you can spend each week or month and takes in consideration the necessities like food, a mortgage or rent, and utilities. Budgeting software is made available through great programs such as Quicken. I personally used Quicken to log all my expenses and to create my first budget.

Here is an short example of one type of budget:
Monthly income: +$5000 *After tax
Mortgage: -$900
Phone: -$80
Electric/Gas: -$100
Auto Insurance & Gas: -$300
Cable: -$100
Car payment: -$400
401K: -$1000
(any other monthly bills can go here)
Balance: $2120 *This is the amount remain for this person to spend on other “things” they would like to buy, and most importantly save (saving will be covered in later blogs).

Budgeting programs, like Quicken, are much more detailed and have great graphs, so I encourage you to use a program like this. There are also websites available online that can give you a layout for a budget. Once you know how much money you have left after paying your necessities, you will know how you have left to spend and most importantly, save. If you spend less then you earn through using a budget, you are one step closer to achieving positive cash flow. Thanks for your time and please bookmark my blog to see many great new tips on achieving wealth.

Next blog: Building an Emergency Fund