All right, I confess. I am a shopaholic! I love to find a good deal.
There is something to be said for enjoying the buying power of the money that you earn. At the same time, it is important to realize the alternatives of going on a shopping spree every weekend.
Budgeting is a great way to track your cash flow in order to help you set future goals. Most people think budgeting is a tedious, useless process. In fact, having a roadmap to plot out income versus expenses and savings during a given amount of time can be extremely beneficial.
A budget can help you see where your money is actually going and allow you to take control of your financial future. Budgets or spending plans can be used for special occasions such as vacations or buying a car. They are a great way to account for all of the little side expenses that are incurred in the course of a normal activity.
Where Did My Money Go?
I often find myself counting the money left in my wallet and wondering where it all went. Sometimes I can remember spending a dollar for some cookies out of the vending machine or the money I spent for doing my laundry. But without tracking these small expenses, I wouldn’t be able to plan for the future and make sure that I won’t be walking around in dirty clothes after running out of money!
In many ways, budgeting is common sense, but accepting that reality can be harder than it seems. By this time, you probably have figured out various ways to earn money. So, I’d like to focus on the expense side of the equation: Income = Expenses + Savings + Discretionary Money.
Planning ahead, rather than giving in to impulse buys, is a smart way to get the things you want without buying things you might use once or never use at all. I know of so many things I’ve purchased, especially clothing, that I regret ever buying. I cringe when I think of all of the money I could have saved and earned interest on throughout those years. It definitely takes determination to be able to stay out of the stores and off eBay!
Small Sacrifices PayOff Later
Being able to sacrifice that expensive Starbucks latte or those Abercrombie jeans are some ways to reduce your expenses and save more money. Doing a cost-benefit analysis on these types of goods really shows us how long it takes to save up that $4 for a simple drink that is gone in 10 minutes or $60 for a pair of pants that go out of style within the year. After taxes, it could take up to a half an hour or more of hard work to earn the cup of coffee. Is it worth it? That’s up to you to decide!
I know as well as anyone how easy and fun it is to spend money, but I also know the gratification that comes from being able to achieve a dream through planning. Credit is an easy way to get into trouble and can actually work against the financial goals you’ve created.
Find Out How MuchYou Owe
Figuring out your income/debt ratio can help you discover how much debt you have. To compute this, you must calculate your current liabilities in the form of loans, credit cards and bills or any sum that you must pay out every month. Divide this figure by your monthly income and you will be able to get a better picture of your financial well-being. This can help you decide how much debt it is wise to take on.
There are so many tools out there to quickly and easily allow consumers to calculate their budget. Young Money, www.youngmoney.com/calculators, offers many free online calculators for college students.
One of the factors that prevent people from not organizing their finances is that they feel too limited by the categories listed on most sample budgets. Here’s a simple solution for this problem: Go through your monthly expenditures to help you think of category names for the money you spend.
Expenses can range from gifts and entertainment to food and transportation. However, the most important part is that you set a goal to save either a certain percentage of your income or a dollar amount each month or week. Always pay yourself first!
Being a smart money manager can allow you to reach your life goals. So start being smart today!