Every great financial plan starts with a sound budget. If you’re trying to pay off bills or save for a dream vacation, a budget is your first step toward making your financial goals a reality. Follow these steps for setting up a realistic budget.
Your first order of business is finding out exactly how much you’re spending each month. Do this by consulting your bank statements, receipts and financial records.
Once you’ve figured out how much money you need to stay afloat financially each month, it’s time to determine your actual income.
In order to determine realistic savings and debt payoff goals, you must find out if you have a budget shortfall or overage. Do this by subtracting your monthly expenses from your income.
The best way to stay on top of your budget is to record all of your expenses and income. Having to input expenses will cause you to think twice before splurging, and it’s satisfying and motivating to record when you’ve met a savings goal.
Aim for sticking to your budget most of the time, and you’re bound to reach your financial goals. Breaking your budget occasionally is OK, providing you get right back on track as soon as possible.
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