In order to have our finances in the positives, we have to make more than we spend each month. If you are currently in the red instead of the black, there are two ways to turn this around, either make more or spend less so you end up living below your means. It’s important to stick to this budget plan so you can secure your financial future instead of living pay check to pay check. Having a proper budget plan ensures that your family will be taken care of in the event of a major unexpected expense.
One of the first things to consider when making a financial plan for yourself or your family is to have some money set aside for emergencies. You should have at least 6 month’s worth of expenses put away, various investments and a retirement plan at the very least. Many people also save for their child’s education and own real estate and businesses to contribute to their portfolio but at the very least you should have some money saved up. Try and get in the habit of putting at least 5% on your monthly income in a separate savings account with a high interest rate.
The second thing to consider is how much debt you might have and work towards paying that off. If your debt is difficult to keep track of or you are drowning under all the interest that you’re paying, try cutting it back to a more manageable amount by paying off the debt with the highest interest first, then paying off the one with the second highest interest and moving along like that until your debt becomes manageable. This will not only help you out financially and give you more money to use elsewhere since you won’t have to pay so much interest, but it will also help your credit score, further securing you for the future.
In order to stay within a budget each month, you may have to cut out some expenses and one of the best things to cut out is any unhealthy habits you might have. If you are a regular smoker or drinker, now might be the time to cut back or quit altogether and save a bundle. If you buy a cup of coffee three times a day, you might want to consider switching to water. This does add up over a period of time and both your wallet and your body will thank you in the long run.
If keeping track of your spending is an issue, try carrying around a journal and writing down everything you purchase. This will also help you keep track of your progress as the months go on to give you further motivation to keep going. Remember that Rome wasn’t built in a day; it’s going to take some time before you can see the results of all your hard work but it is well worth it in the end. Keep budgeting your money and paying yourself first every month and you’ll see it add up fairly quickly. Make a budget plan and stick to it no matter what.
For more information, check out Budgeting and Saving.