KNOXVILLE, Tenn. (WATE) - What do you want your money to do for you this year? Buy a vacation? A house? Merely pay the bills each month, with maybe a little left over?
Budgeting can help with every one of these goals. In addition, having a concrete goal increases your chances of sticking to the budget.
Getting a handle on where you spend money is important for two reasons. It can help identify leaks in your budget. These might include the $100 a month gobbled up by daily fast-food breakfasts. Also, it can help you make a realistic budget. If you are currently spending $800 a month on groceries, budgeting for $500 is probably setting yourself up for failure.
The old-fashioned way to track expenses is to keep a log of every penny you spend. However, you can make the process simpler by signing up for a free account with PowerWallet. This service tracks expenses automatically and neatly categorizes them for you.
Now that you've tracked expenses, use those amounts as a guide to create a written budget. Whether you use an online tool, an Excel spreadsheet, or a notebook and pen is up to you. You want to have the budget recorded in a location where it can be easily accessed and changed as needed.
Always estimate your income low and expenses high. It's better to reach the end of the month and find you have extra money in the bank than to come up short.
Once you have it written down, don't ignore your budget. Make a point of comparing your actual expenses with your budget on a regular basis, such as each payday. If you're using PowerWallet, it'll be easy to quickly see how much you've spent in each category for the month. Then, you can make adjustments as necessary.
On the flip side, maybe it's the last week of the month, and you haven't spent a dime of your entertainment budget. In that case, it's time to make a date and have some fun!
Finally, your budget is a living document. You shouldn't set it and forget it. Instead, evaluate it and make changes as necessary. Are you always blowing through the food budget? Then, you may need to increase it and consider where else you can cut back.
Ultimately, your budget is not about restricting money, it's about empowering it. A good budget finally puts you in control of your dollars and allows you to dictate where money is going instead of letting incidental purchases drain your bank account.