Tips for Making a Financial Budget
By: Katrina Irwin
Updated: June 13, 2012
David G. Young, CPA from Young & Company CPAs joined Katrina Irwin on News 8 at Sunrise Monday.
He talked about the steps to making a financial budget.
His advice:
1. Take personal responsibility for your household budget.
Budgets are needed to make sure your money is being used the way you want it to be used and to ensure that you get off the treadmill of living paycheck to paycheck.
2. Creating a budget generally requires three steps.
Calculate what you have coming into your household.
Evaluate your current spending and set goals that take into account your long-term financial objectives.
Track your spending to make sure it stays within those guidelines.
3. Use software or Internet based applications to track your income and expenses.
Examples: - Quicken, Micorsoft Money, Mint.com
4. Decide what you need to pay
Rent / mortgage payment
Groceries
Gas, Electric, and phone
Auto expenses - car payment, gas, and maintenance
5. Determine your wants
"You can't always get what you want
But if you try sometimes well you might find
You get what you need " - The Rolling Stones
Recreation - restaurants, cable TV, movies, vacations,
Gifts, Big screen TV
6. Watch out for cash leakage.
If you visit the ATM more than once a week and you can't track where your money is going it is time to step back and examine where that money is being used. Keep a small notebook and write down every time you spend money and what you spent it on to track where your money is going.
7. Beware of spending creep.
As your annual income climbs from raises, promotions and smart investing don't start spending for luxuries until you're sure that you're staying ahead of inflation. It's better to use those income increases as an excuse to save more. And if your income decreases you need to cut spending as well.
8. Make sure you have emergency cash set aside.
a. Typically three to six months living expenses in cash.
