It’s the time of year when dollars seem to fly away. You can manage your money, though it may seem out of control. And it’s not a hard thing to do, either.
The first, and most helpful, thing you can do to manage it is to build a budget. That may sound boring or overwhelming, but it doesn’t have to be. Take 15 minutes to jot down what you already know, and a picture will emerge on how you can plan ahead.
We’ve included a worksheet for you to use, but there are many online or app budgets that work well, too. And you can use these cash flow calculators to help you try out different options.
There are two main elements to every budget: Income and Expenses. It’s that simple. You can be as detailed or high-level as you want, but getting started is half the battle. So let’s get started!
It helps, while you’re building your budget, to have your actual paperwork handy. Some figures you’ll most likely know offhand, like your rent or mortgage. But gather the following: a recent pay stub; any other income you may have (dividends or alimony, etc.); one of each of your utility bills; auto and credit card payments; and other regular expenses, like your gym membership, or club dues. If you use Internet Banking, you can use your history there to fill in your worksheet.
Once you’ve gathered your information, add up your income. Put it in the “Budget” column.
Next, list and add your expenses: housing, gas, electric, water, phone, etc. One big key is to add a line high up on your budget for savings: Pay yourself first. Put a set amount in savings every month, before all the other bills.
Another key is to add a set amount in “Expenses” for fun things: Gifts, movies, dining out, and fun money. Planning on that will help you stick to the rest of your budget with more commitment.
Once you’ve put in all your recurring costs, add up your expenses. Use the “Budget” column for now.
Subtract your expense total from your income. The result is your actual income, which, if it builds up, you can periodically add to your savings, or put toward gifts, or debt, or other expenses. Knowing exactly how much extra you have is a boost: you can start thinking about vacation opportunities, or pay down a larger bill.
You may not have extra; if so, go back and adjust some things so you can meet your expenses. At least you know what you’re facing, and you can take steps to reduce your expenses or add to your income.
Once you have your numbers in the “Budget” column, keep the budget worksheet nearby. As actual bills come in, fill in those boxes in the “Actual” column. A month from when you first set it up, look at how your budgeted amounts and actual amounts measure up. If there’s a difference, put that in the variance column; that shows you where you can adjust for the next month and how to make your budget fit more closely to your life.
Now that you know exactly where your money’s going, you’re back in the driver’s seat. You can decide for yourself where you want to go.
If you need further help figuring out how to pay your expenses or build your savings faster, check our website for specific information, at nusenda.org, or call us to set up an appointment for financial advice at 505-889-7755 (800-347-2838 outside the Albuquerque area).