We talk about how to look at expenses in order to figure out where your money is going.
The first step in a budget is to discover where you are spending your money. Most people already know what the make, but expenses can be difficult to track down. Don’t enter a budget with the mindset of “cutting back on spending.” Look at it as identifying where your money is going — making sure that you are happy where you are spending your money You can make changes based on your findings
- Utilities (Gas, Electric, Water, Trash, Cell Phone)
- Transportation (Car payment, gas, insurance, upkeep)
- Family (Childcare, etc)
- Food (not going out, just food from the grocery store)
- Going out
- Monthly reoccurring
- Personal funds
- Student loans
Look through credit card records and track your spending. If you use cash, track expenses on paper. Use about three months of data to find out where you are spending money. Spot trends and adjust as needed — this means you may cut back in some areas but you are putting your money where you want it to go, not where it used to go.
A budget is putting you in control of your money.
A budget is about giving you financial freedom not to stop you from doing what you want.