Gathering information
Find out how much you take in each month.
If you do not have a fixed income (if you work different hours each week), then you should average out the last 6-12 months and work with that number.
Find out how much you owe.
Car payments, loans, etc. and find the minimum amount you should be paying each month to get out of debt within a reasonable time frame for your needs.
Find out how much you need to buy/pay for each month.
Groceries
Housing
Transportation
Insurance
Childcare
Telephone bills
Cable/internet
Basic utilities
Doing the math
Add up how much you need to pay out, from what you bring in, and adjust accordingly
You may be “in the red”, which means more money is going out, than what is coming in. In this case, you need to move things around, or give up unnecessary luxuries like cable, internet, or extra food.
This is too little to have at the end of step 2, considering we did not factor in how much is lost during taxes.
To correct this, we can find areas to cut costs in order to save more money each month.
If you have money left over, that is extra money that you may decide what to do with.
What next?
If you do have extra money
“Pay yourself” by putting it in savings. Making a habit of putting a little money away from each paycheck will help build a buffer if something unforeseen happens.
Most people’s problems is that they don't live within their means, which means that they spend money that they shouldn't or don’t have, or they are living to luxuriously for how much they make.
Remember to treat yourself once and awhile. The key is once in awhile and being smart about it. Use coupons to aid yourself and plan out your splurges, like planning a trip to the movies or a special item.
Be disciplined!
1. Be disciplined with that ever you choose to spend your money on!