Money Struggles? 5 Strategies for Forming a Budget Plan
Friday, May 27, 2016, 6:00 AM | Leave Comment
Budgeting is one of those tasks that most people find scary. Regulating what you spend on a monthly basis seems very limiting, but it’s an important step toward financial freedom.
A lack of a budget can lead to serious problems with money.
Here are five strategies that can help those who have money problems as they seek to formulate a budget.
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Know Your Income
It’s really tough to set up a budget when you don’t know what’s coming in each month. Most paychecks for those on a salary or those who work a full-time hourly job should be about the same every pay period.
Knowing what’s coming in is the first step toward a budget. Use a budgeting program to track your income, or at the very least keep track of how much you make each month and how much of it is being spent on necessities.
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Trim the Fat
Most Americans like to spend money. Cutting out expenses that are unnecessary can go a long way toward staying within a budget. Cutting expenses might be as easy as avoiding a daily latte or cutting the cord on the cable company.
For those who don’t partake in these luxuries, it might be more difficult to find areas to reduce; however, there are creative ways to save money, like adjusting the thermostat to a slightly less comfortable level when no one is home.
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Set up an Emergency Fund
One of the biggest money problems people run into is the lack of funds to pay for emergencies that might come up.
Putting aside money every week or month for emergencies can help families keep from going into debt every time a car breaks down or a washing machine gives up the ghost.
Most advisors recommend having at least $500 to $1,000 available for these emergencies. After the fund is full, be sure to throw this money toward any debts.
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Pay Yourself First
If you don’t pay yourself first, it’s not likely that you’ll be able to save anything. Set up a savings or brokerage account where you can deposit money from every paycheck for the future.
This should be set up after fully funding an emergency fund. Even $10 a week can add up to substantial amounts of money over time.
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Seek for Additional Income
More money might come from a raise at work, but these are getting few and far between for most Americans. This is where additional income from a second job or freelancing can come in handy.
More money means that you can pay off debt at a quicker pace and save for future needs like retirement.
Budgeting is not fun, but it’s a necessary task. Those who take steps toward financial freedom will be happy in the long run that they have the money necessary to take care of the common problems that life can throw up at them.
If you feel like your money is out of control, you might consider talking to a bankruptcy lawyer at a firm like Wiesner & Frackowiak, LC; however, these five steps can be a great start toward financial stability.
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