5 Ways a Monthly Budget Can Keep You On-Track

Jan 10

5 Ways a Monthly Budget Can Keep You On-Track

When you want to improve your personal finance situation, there are plenty of tools, gadgets and apps to help you do so. One of the best tools available to you doesn’t require any fancy tools or apps, although you can certainly employ them if it makes the job more fun. A monthly budget is your best friend when it comes to paying off debt, finding the areas where money goes out the window and building a savings account. If you’re not sold on the idea of creating a budget for each month, here are five considerations that might increase your enthusiasm.

1. Get a Clear Picture of Your Income vs. Outgoing Expenses. If you’re flying by the seat of your pants and hoping to have enough income to cover expenses, you’re destined for problems. Creating a monthly budget gives you a clear picture of your financial situation so you have a foundation to start from. Since budgeting isn’t everyone’s strong point, there are excellent apps and budgeting tools available to guide the process.

2. Gain an Honest View of Your Debt Situation. Once your budget is created, you’ll be able to see exactly how much debt you owe, how much you pay on it each month and the amount of your payments that are going to finance charges. Initially, seeing your debt total can be discouraging, but an honest view allows you to start tackling the issue to pay down debt. Should your debt be way out of control, it might be wise to consider bringing in extra income for a while through a part-time job, selling on eBay or participating in paid medical trials.

3. Uncover Hidden Money Pits. Those little extras you purchase here and there, such as expensive café coffee or extra treats at the grocery store, can eat up a lot of your income over the course of the month. To tighten up your spending and see an immediate difference, eliminate unplanned and unnecessary purchases.

4. Include Yourself in the Payments. Many people who are trying to pay off debt wonder how they can possibly build a savings account when they’re up to their eyeballs in bills. As you create a monthly budget, include your savings account in the payments. Even if you only save a small amount of money each week, such as the cost of a sandwich, you’ll still be building your savings.

5. Keep Yourself On-Track and Accountable. Being clueless about your financial situation might make it easier to spend carelessly, but you won’t be doing yourself any favors in the long-run. After you create your monthly budget, check back with it regularly to keep yourself on-track and accountable.

Stressful financial situations seldom develop overnight, so exercise patience as you work toward improving your personal finances. Begin by listing your bills and expenses, tally them up and compare to your income. Work toward paying down debt so you don’t continue to lose money to exorbitant finance charges each month. Build your savings so you have a safety cushion and can indulge in an occasional splurge without accruing debt. A monthly budget can help you develop smart money habits that promote a happier, less stressful way of life.

Guest post contributed by Samantha Rodgers, who is keen on personal finance and money saving tips. She also writes about volunteering for paid medical trials – visit volunteers.gsk for more information – as another means of raising income and is always in pursuit of finding new manage money ideas.