What are budgets and why should I have one?
A budget is a record of an individual’s income and expenses that will guide the individual to be financially successful. A budget can be as simple as writing down basic monthly income and expense amounts on a piece of paper or creating a detailed worksheet with information for each day of the week. A budget can help individuals reach a variety of financial goals such as saving for a car or encourage an individual to spend less money on clothes or eating out.
Guideline for Creating a Budget
- Track your expenses for a month so you know exactly where you are spending your money.
- Evaluate your income vs. expenses.
- Classify your expenses into wants and needs.
- Determine if the expenses in the ‘want’ category can be reduced.
- Create your budget for a week or month and stick to this budget.
- Write down your short-term and long-term financial goals, so that while you are following your budget you know what goals you are trying to achieve.