Budgeting your money is absolutely key for an individual to experience living debt free. Begin in the simplest of ways by making a plan for tracking your expenses. Whether you decide to keep your receipts in an envelope or to use a computer software program, take this first step now on your road to real financial freedom.
After the first month of tracking your expenses, you will be able to see surprising things such as how much that cup of coffee at the cafe costs you in a month, and how fast incidentals like this add up. You will get a hint of how budgeting your money will help lead you toward the goal of living debt free.
Budgeting Your Money Taking Shape
Now, let us take a look at the three month mark. At this point, you can begin to average out some of your expenses and begin determining your financial lifestyle. Here, you will really start to see the importance of budgeting your money. You may determine that you have spent $1800 on groceries in the last three months. By averaging this expense, you determine that your current lifestyle requires setting aside for $600 from your paycheck per month on food supplies.
At the six-month mark, your financial lifestyle is becoming more clearly defined to you, and you should have the idea of establishing some real savings.
Remember that, no two families’ tracking will look the same because of personal choices and the lifestyle you desire. What will be the same, however, is spending always needs to be lower than income after taxes.
At the one-year point, you will have a very specific view of your monthly spending habits and the very best means for budgeting your money. A year may seem like a long time from now, but it is necessary to take this amount of time to be certain that you are accounting for all of those periodic expenses such as insurances, license fees, taxes, etc.
These are annual and semi-annual expenses that you need to figure into budgeting your money in order to reach your goal of living debt free. For instance, if your homeowner’s insurance costs $600 and the bill comes in January, you will need to be budgeting your money monthly at $50 for that expense. If your automobile insurance is $1200 a year, you will need to be set aside $100 per month for that bill. After a year, you will know how all your expenses fall, so you can accurately and decisively adjust to living debt free.
This is the plan for for which you are to embark. Your mission, if you choose to accept it, is to know the actual cost of living your and then put this money aside. When the bill does come, you are ready. Now, you are budgeting your money and beginning to reach your goal of living debt free.
As Life Happens
Things are going to come along that will affect this process. They always do. Gasoline prices will rise, along with fuel oil or other energy related bills.
Groceries will cost a little more or you will find you have to replace a bad water heater. Find a place to shop that is cheaper. Cut back. Do whatever is necessary.
Do not allow the unexpected issues of life to throw you off from your intensified goal of becoming financially free. Simply sit down with that notebook or computer program and calculate these expenses into your plan. Budgeting your money is adjustable; it has to be in order to deal with the realities of life.