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Financial Tips: Helping you make wiser financial
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The ABCs of Effective Household Budgeting Part 1: Getting Started
"Where did all my money go?"
Sound familiar? It can be hard to control your month-to-month expenses AND save for your financial goals, like a new home or retirement, at the same time.
Fortunately, there's an effective, step-by-step process that can help you take control of your financial obligations and successfully meet your savings objectives.
A. Get Ready ... Find Your Starting Place.
First, figure out your starting point by reviewing your budget. Keep track of the money going out and the money coming in.
Get started by using this simple worksheet. Or some people use bookkeeping software as a helpful budgeting tool. While you make changes, keep track of how they impact your budget.
B. Get Set ... Form Your Plan.
Once you see the "big financial picture," you'll have a better idea of any areas that need attention.
Attention to Spending:
Do you need to eliminate some expenditures? Or find ways to lower household expenses?
Are your discretionary expenses out of control? Simple "cutbacks" can free up a surprising amount of extra money you can then invest.
When it comes to necessities, consider these painless ways to save:
· Lower your thermostat by a few degrees.
· Increase the deductible on your car insurance.
· Use coupons to cut the cost of groceries.
Try these 66 basic ideas to lower your spending and boost your savings power.
Attention to Savings and Debt:
Should you focus on increasing savings? Or reducing debt?
General Rule about Debt
Once you begin to reap the rewards of lower expenses, consider where your extra money will do the most good. As a general rule "bad debt," such as high-interest credit card balances, should be paid off first.
How much debt do you have? You may find that reducing debt is your highest priority.
If you have little to no debt, focus on savings.
C. Go! ... Follow the Money!
Start using your budget, and watch how you spend your money. You may find you need to make updates.
· Is the budget working for you?
· Did you estimate your expenses correctly?
· Are there some expenses you thought you could cut but find you need?
· Can you put more toward savings than you thought?
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