Money can be stressful, but avoiding the issue doesn’t make things easier. Give some thought to how you make ends meet, and use the following steps below to help you get started.
Know how much you make and how much you spend.
Gather up your bills and make a list of your expenses. Round up to the nearest $10 to make the math easy. For example, if your electric bill is $56.94, write down $60. It’s better to estimate too high than too low. Include all expenses:
- Rent/mortgage (One tip is to avoid spending more than 30 percent of your monthly income on housing.)
- Home insurance and maintenance
- Childcare and activities
- Car payment, insurance and gas
- Electricity, gas and utilities
- Health and life insurance
- TV/Cable and Internet
- Home phone and cell phone
- Credit card and other debt payments
- Groceries (Typically, $600-800 a month feeds a family of four.)
- Entertainment (restaurants, Netflix and fun things that aren’t necessities)
Compare what you spend to how much money you make. See where you need to make changes so that it you’re not spending more money than you make.
Start an emergency savings account.
Your rainy day fund will be your lifeline if your car breaks down or anyone in your family gets sick or injured. Even if you’re currently paying off debt, set a goal to have $500 or $1,000 saved for emergencies, and slowly but surely work toward that goal by setting aside a little bit of money each paycheck.
Cut back on expenses and keep track.
It’s common for many people to spend more than they earn, and every paycheck is a new opportunity to make good choices. Find areas where you can save money. Examples may include going out to eat less, canceling cable television and your phone landline, or carpooling to work. Keep track of how much you’re spending each month with the First United Budgeting Tool, downloading your bank’s mobile banking app, or other websites and apps such as Mint.
Once you’re comfortable with the first three steps, then you can begin to consider saving for retirement, paying down debt, saving for your children’s education, and achieving other financial goals. Start with small goals and you’ll be motivated to keep going.