Establish boundaries for your spending.There is no need to pay for something you don’t need or use.If you found some expenses that maybe you don’t need, (i.e., cable subscription that you don’t use or a dating app that you haven’t looked at in years but still paying for), cancel it.This is where the adjustment process can come into play. If you were honest in step three and have a positive balance, that is great news! If you have a negative number in this section, then it could be time to rethink the expense section. Add up all the expenses and subtract them from the revenue section and what you have left over is your surplus or deficit.This is the cash flow analysis section and the part that may or may not require some math skill. Compare what you take in versus what you spend, and adjust.If you don’t consider all your expenses, you will only hurt yourself in the end. The most important part in this section is to be completely honest with yourself.To be honest, anything that you spend money on should be considered an expense and needs to be added. If you are putting money away or investing every month, that should also be a line item. Add lines for mortgage or rent, car payment, utilities and cable/internet, groceries, going out, clothing, gym fees, etc. These items need to be separate line items on your budget. In this step, we need to create expense accounts to add to our budget. Once we have established the monthly income from the previous step, we need to compile the expenses.This step could be the most intensive depending on your lifestyle. This section is called the “expense” section. Watch for planned and predicted expenses.Basically, we are looking for anything that pays you something.If you have a consistent interest payment from an investment, include that as well.This doesn’t just mean paychecks if you have a side business that you get 1099’s from, add that in. We want to take a look at any monetary source. Review bank statements, investment accounts, credit cards, loans, utility bill, pay stubs, receipts from the last few months, etc.To take inventory of your finances, you must gather all your financial information. This is the most important part of the process and key to your personal success in creating a budget.
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