Can making a budget really make you feel better about life? You might be surprised! One of the most powerful things you can do to relieve uncertainty and financial stress is to take a step back and make a plan. A budget can help you figure out how to meet both your short and long-term financial goals. Think about it like a fitness plan: it’s not about dieting, it’s about getting healthy, staying healthy, and being ready for the life you want!
Take the first step
The first thing to do is to understand your overall financial situation so you can put your money to work for your goals! A few starter questions and this simple worksheet can help you get an idea of what you have to work with, what your commitments are, and what you have remaining to devote to your goals.
1. What do you want to accomplish? Set a specific and detailed goal. By putting specifics like an amount or a timeframe on your goal, it makes it easier to see your progress and accomplish it. For example, instead of “save more money” you could “save $100/month for a year to have $1,200 to buy a new computer.”
2. How much do you have to work with? Tally up all your income sources to find out your total take-home income.
3. How much is already committed? Add up all the bills and expenses that you know you’ll have to pay each month. These are things like loans, minimum credit card payments, utilities, groceries, rent, taxes, cable bills, etc.
4. How much do you have left for your goals? This is the amount that you can apply toward your goals and choices. Think about what is most important to you, and what you need to get there. What you decide to do with your discretionary (leftover) income is all about you and your goals.
You CAN Do It
Remember, nothing is set in stone. You’re in charge of your plan and your goals! It’s always a good idea to pay off debt and to make savings a priority (pay yourself first!) You can always adjust your goal along the way, review your budget and make adjustments to trim expenses or direct money toward something different.
Budget Not Balancing? There’s Help Available
If your income is less than your commitments, don’t panic. It’s going to be ok. Your budget can help you find places to save money and trim expenses. In addition, if you want to speak with someone, GreenPath offers free debt and credit counseling. For people who need it, a Debt Management Plan can lower your interest rates and fees, and help you save money and pay off your debt faster.
Whatever your financial situation is, a budget and a plan are great first steps on your path to meeting your goals.
Adapted from an article distributed in partnership with GreenPath Financial Wellness.