Make a plan

Make a budget

You can't get very far if you don't know where you're going, so make a plan. 

I'm not calling it a budget, but you certainly can if you want to. 

Grab pen and paper, your phone's notes app, whatever.  

Image by Bruno Kelzer

1

Track what's going out

Keep record of everything you spend money on for a week, two weeks, or one month. A month is best because most, if not all, of your income and your bills will be included.  How you do it is up to you.  One option is to keep every receipt in an envelope (making sure to jot down what it's for if there isn't enough detail printed on it... hello shopping amnesia!)  Or use an app like Mint or your bank/credit card transactions log.  Or keep a spending journal in a notes app or in an old fashioned notebook.  Whatever works for you.

Don't forget to make note of seasonal spending and periodic bills that may be due every few months or even once a year.  

Image by Alexander Mils

2

See what's coming in

Paychecks, benefits, gifts.  List all the ways your wallet and bank account may grow over the course of a month.  

Image by Plush Design Studio

3

Look it all over

Is there anything you've missed?

Did you account for saving for irregular or annual expenses? I don't mean emergencies, but things like new tires for your car, a new dishwasher, a vet bill, holiday gifts, etc.  These aren't surprises (because you know they'll come up, even though the timing may not be in your control), so you can, and need to, plan for them. Tally up what all of this costs you over the course of a year and divide by 12 to get a monthly amount.  

Image by Annie Spratt

4

Now for the math

   Income

- Savings goals

- Spending on needs (including debt)

- Spending on wants

_____________________

= 0

Start with your income, and subtract budgeted goal spending, then needs and wants.  The end result needs to be zero.  Zero?  Yes, give every dollar a job.  If you have leftovers, increase your savings and maybe even plan for a splurge if you can afford it.  If you come out with a negative number, take another look at your spending on wants. (Or even your needs... you may be able to trim there as well.)  If that doesn't work, look to increase your income.

Image by Andy Beales

5

Put it into practice

You now know what you have to work with. If seeing it laid out like this works for you, go forth and make a plan.  Many people like to use online/app software.  I've used Mint before and am currently trying YNAB ("you need a budget.")  If a piece of paper on the fridge works best for you, that's cool, too. 

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