Well, friends, it’s that time of year. The time of year when we sit back and appreciate all that we have. We reflect on our accomplishments over the year and plan to be more successful in the new year. One way to be successful is by establishing a responsible budget.
Budgeting for a family can be intimidating and scary. When you get married, you’re no longer responsible only for yourself, but for your spouse – and later for your children. Being realistic and honest about your financial capabilities is important.
Establishing and sticking to a reasonable and responsible budget
1| Determine Your Debt and Expenses
Before building a budget, you need to know your income and your expenses. Don’t look simply at your essential expenses (things like Mortgage/Rent, Car Loans, Car Insurance, Clothing and Food), but those non-essentials too (things like Cable/Satellite, Cell Phones, Birthday Gifts, and landscaping).
Keep in mind that you must be honest with what you’re spending your money on. It’s a good idea to grab your credit card or bank statement for the last three months and read it thoroughly. You’ll be surprised by how quickly those $4 lattes add up.
2| Cancel Services You Don’t Need
When reviewing your bills, be sure you’re using all of the services you are paying for. If your cable provider is charging you just $5 a month for a premium movie channel you don’t watch, cancel that service. Don’t travel internationally – it’s time to remove that $10 a month charge from your cell phone bill.
2| Build a Savings Account The job market and economy in our country has been on a crazy ride over the last seven or so years. Now more than ever, it’s important to have a safety net in place – at least three (3) months worth of expenses. Right now, Capital One 360 is offering a cash bonus to new savings account holders. And the account is fee free!
Did you know that if you save just $25 a week, you’ll have $1300 in one year. Cut out your 5 latte a week habit and that will add another $1040 to your savings. Add the $180 we found by cutting cable and cell phone services and your annual savings is $2520 without making too much of an effort.
3| Pay Your Bills How you pay your bills can be just as important as how much you’re paying for your bills. If you are paid biweekly, you should pay your bills that way. It’s easy to divide your bills by the number of pay cycles and set them up on auto-payment.
When creating your budget, keep those three months worth of statements handy. You can easily figure your average expenses for things like food, electricity, gas, mortgage/rent, cable, and entertainment. Once you’ve cut out the things you don’t need. You’ll be left with three months of solid figures. Add the monthly totals and divide by three.
That total is your monthly expenses. If it’s more than your income, you need to go back and reduce your expenses more. If not, you’re budget is ready.
4| Don’t be intimidated Creating a budget is a time consuming task. But, it can be done as long as you keep an open mind.
This holiday season, to encourage consumers to stay on track with their finances, Capital One 360 is decking the halls with deals you can bank on, including new account bonuses, referral bonuses and closing cost credits. Be sure to take advantage of their great Black Friday Sale.
What tips do you have for establishing a responsible budget?
I was selected for this opportunity as a member of Clever Girls and the content and opinions expressed here are all my own.