Your future finance can be put into question when you start spending more money than you can afford to. Taking out loans, putting items on credit cards, choosing financing plans and more can all make the process of tracking your monthly expenses difficult. Most people find themselves in a battle of income versus expenses and your expenses can start to get out of hand when you start to spend your limits or at the very edge of your income level.
Financial problems can come up at almost any time and are often caused by events completely out of your control such as a loss of a job, serious illness, or a major financial setback like a car accident or flood. You can avoid some of these financial problems by tracking some of your expenses each month and finding ways where you can reduce your spending.
If you are only working to make ends meet with your finances, the goal will be to cover your base expenses and then have some extra money available at the end of the month to start building up some savings. In order to establish a proper savings cushion, it’s a good idea to build a monthly budget.
When you start to delve into some of your expenses you can see just how quickly things add up. Your payments on your vehicles, cable bills, cell phones, Netflix subscription, weekly movie date, and more can grow more costly when you total them up.
To get started with a monthly budget first identify your monthly income. Write down all of your monthly income sources over the course of the month and if your income is unsteady do an average of the income you took over the last six months to represent your earnings.
Categorize all of your expenses. Start simple with your primary expenses like rent or mortgage, car payments, and then move down the small expenses like your daily coffee, mobile gaming purchases, and more.
Keep receipts for a month and track daily spending. Consider how much you are spending every day over the month. Track all of your impulse purchases and see how these extra purchases continue to add up to your budget.
Review your budget at the end of the month and see where your money is going and if you are carrying a negative balance on your earnings. If your spending outweighs your earnings, you may have to readjust your budget or make more conscious decisions on your spending. Outlining exactly how much you will spend on each category each month can help you retain a more rigid focus on your finances and help you avoid financial problems in the future.
This post was written by Trey Wright, one of the best bankruptcy lawyers in Tallahassee! Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigation.
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