We’re going to cut to the chase: The foundation for sound financial decisions is a budget.
If you don’t have one, you need one.
If you do have one, you need to review your budget every month to make sure your budget is working.
What IS a budget?
Your budget is your plan for your money. Simple as that! There are so many ways to budget, but really it breaks down to 3 things:
- Calculating how much money you have coming IN each month.
- Calculating how much money you have going OUT each month.
- Subtract the OUT amount from the IN amount. The goal is to have more coming in than going out (also known as a surplus)!
You can use our free budgeting template to get started now.
Why do I need a budget?
There are plenty of reasons to make a budget for your household, but there are 3 core reasons that we want to talk about.
- You’ll know if you’re spending money you don’t have! Remember, you want a SURPLUS (i.e. money left over) every month. Not only that, but you’ll quickly see if you’re spending too much on your WANTS and if you need to cut back.
- You can better prepare for emergencies… and have peace of mind. An emergency fund is essential for every household. Leave room in your budget to stash away a little extra for the unexpected.
- Easier saving for your financial goals! When you’re making your money plan, make sure to consider your dreams. Put away some money for your next vacation, a down payment, and your retirement. Don’t forget about your short-term goals either! You can start saving for a new couch NOW.
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