Many people know they should have a budget, but never get around to actually creating one. Part of what holds people back is trying to build a budget based on “standard” categories that don’t reflect their lifestyles.
We actually already have a REAL budget that we use and just don’t know it — Our REAL budget is the amount we spend and what we spend it on. The challenge is when our REAL budget doesn’t match up with our incomes! But if you start with this REAL budget, you can work on making positive changes, based on your own spending habits. So how do you make the most of your REAL budget?
- Gather your financial history for the past year, using bank statements, credit card bills and receipts. Online banking makes this so much easier.
- Group your expenses into categories.
- Now analyze the income you have to cover these expenses, keeping your savings and retirement goals in mind.
- If you come up short in Step 3, look for ways to bring your expenditures in line with your income.
Whatever you uncover, understanding your REAL budget gives you more control over your finances now and in the future.