Budgeting is feared by most people. It is crucial to set up a home budget in order to succeed and effectively plan and save for your future.

Each of us has responsibilities and jobs to do, but not having a budget could wreak havoc on us and our family’s future. Many Americans each year file bankruptcies, or worse, because of unexpected medical expenses, loss of income (job), or some life changing event.

The primary cause is that most live paycheck to paycheck or rack up huge amounts of debt or in some cases waste money that could otherwise be saved. Poor home budgeting can lead to divorce, relationship problems, or it can cause some people to become physically ill.

The following are some easy steps to help you take control and set up a home budget:

• Step 1:
  • Set up a system and get organized! You need to set up a calendar for YOU and your personal finances. Schedule 30-45 minutes once a week to review your expenses and bill summaries. Also start tracking your progress. The home computer wasn’t invented for just email and video games, most come with a calendar and some with money or budgeting software. Your household is a business and its time to start thinking of it this way, take control and begin by putting you and your family first with a home budget.
  • Set up a file system and dedicate a small file cabinet or safe for your finances.  Gather all of your financial, legal documents, account statements and monthly bills. Make sure that you shred any document that maybe too old and contain sensitive information.
  • Determine your Goals. These could be retirement or a special purpose like buying a new home or funding a Child’s education.

• Step 2:
  • Collect three months of pay stubs and determine your average monthly income.

• Step 3:
  • Gather three months of bills, add them up and divide by three to calculate your monthly fixed expenses such as rent or mortgage, utilities, phone, car payment, insurance, student loan payments, and credit card payments.

• Step 4:
  • Add together three months of other discretionary monthly expenses, such as groceries, clothing, credit card expenses, taxes, medical bills and cash outlays. Divide by three and add the result to your monthly expense total. At this point you may need a strong drink, but hang in there.

• Step 5:
  • Evaluate your expenses. Look for opportunities to economize and cut back. Develop a plan to cut back spending in specific areas, such as grocery shopping. Make a list, plan your meals for the week in advance and use store coupons. Minimize the number of times you eat out. Leave the debit card at home and give yourself a weekly allowance. Remember your Goal! Nothing good in life comes without some sacrifice. If saving money and growing your wealth was easy we would all be rich.

• Step 6:
  • Develop a monthly home budget and stick to it. Don’t be afraid to tell your friends and family that you’re on a budget. It’s like if you are going on a diet or quitting smoking, you would let others around you know and help support your commitment. Include your family, loved ones, partner or spouse. By sharing the goals and achievements together it will make this process much easier. If you have a family, assign jobs and tasks like the home calendar and weekly budget reconciliation. This could be truly the best education you could pass to your children and give them a new perspective on money management.  They surely won’t learn this in school.

• Step 7:
  • Set up a savings plan such as a passbook account, certificate of deposit (CD) or individual retirement account (IRA), and begin making regular deposits. The golden rule is to save 10% of your income! If that makes you laugh you should know that about 30 million Americans live below the poverty level.

• Step 8:
  • Track your income and expenses weekly or monthly to evaluate how the plan is working, then fine-tune to produce the desired results. Use personal finance software to gain an accurate overview of your spending and locate problematic areas. Click Here to receive a FREE expense tracker for your computer. Be strong and take control of your finances or your finances will take control of you.

If you’re trying to develop a more comprehensive review and would like to get a Financial Snapshot review, Click Here and a member of our team will give you a hand. This Financial Snapshot will provide insight on the following areas:

• Monthly income and expenses review
• Financial Goal Review
• Retirement Tracker
• Education planning

Budgeting and planning can be difficult as well as time consuming. Some folks get so flustered they give up and that’s not a good option either. You can also talk to a financial advisor, financial planner or CPA for help. They may charge a fee for the service, but sometimes to have professional help keep you on track it could be well worth it in the long run. Remember you’re the CEO of your household and it’s important to take control of your finances and run it like a business.