Basic Rules to Budgeting and Money Management

  • Assess your financial situation. Determine your living expenses, periodic expenses and monthly debt payments you owe.  Compare your expenses to your monthly net income. Be aware of your total debt.
  • Develop a realistic plan. Create a worksheet to document your monthly expenses. Record where and what you are spending money on. These expenses could be fixed (housing, utilities, child care, student loan payments, etc.) or flexible expenses which vary from week to week or month to month (unexpected emergencies, medical and prescription bill, eating out, etc.) Once you know what you’re spending money on, you have the ability to take control of your finances by creating a budget.
  • Determine the difference between needs and wants. Create a sound budget by taking care of your needs first (food, housing, clothing, transportation). Money should be spent on wants only after needs have been met.
  • Don’t allow expenses to exceed your income. Make adjustments in your budget when you are close to over spending. Take your lunch for the week instead of eating out. Evaluate the importance of expensive luxuries such as cell phones, cable TV, and designer clothes.
  • Pay bills on time. Maintaining a good credit rating and avoid late charges. If you are unable to pay your creditors, call, explain your situation and set up a payment agreement.
  • Use credit wisely. Determine what you can comfortably afford to purchase on credit by reviewing your budget. Don’t allow your credit payment to exceed 20% of your monthly paycheck. Pay more than the minimum on charge accounts. Add a few extra dollars to your payment. Avoid borrowing from one creditor to pay off another. Make a conscious effort to use paper (actual dollars available) not plastic (credit cards).

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