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It’s a few days before the next payday, and you’re struggling to figure out how the money you have left in your pocket can sustain you.  Half of your next paycheck is already “spent” because you swiped your credit card to get that new coat that you’ve always wanted.  You’re justifying the purchase to yourself since you bought it on sale, but you know deep down your finances will be screwed for the next few months.

It is indeed hard to manage money, especially for those of us whose pockets are not as deep as Jeff Bezos’ or Bill Gates’.  But I want to encourage you that it is not an impossible task. If you’re determined to break out of that paycheck to paycheck cycle, you need to reduce overspending. If you don’t want the stress of being broke, the best thing you can do is to have a budget.

What is a budget anyway and why do you need it?  A budget is a plan on how you allocate your income over a given period to meet expenses and achieve goals.  It gives each cent of your hard-earned money a purpose so that you don’t overspend.

If you’re budgeting for the first time, here are a few suggestions on how you can get started.

1.  Add up all the “money-ins” like your wage and side-hustles. Determine your “money-outs” like food, rent, gas, utilities, gourmet coffee, shopping, etc.  Plan for those months with extra spending like Christmas or your car registration renewal month. If you haven’t considered it yet, include savings (at the very least) and retirement funds in your money-out items.

2.  Be realistic and determine which money-out items are necessary.  If you want your budget to work, there will be trade-offs here and there.  You’d be surprised how much money you can save and/or reallocate by cutting on dining out or shopping.

3.  Automate whenever possible.  You can auto pay your bills and set up an auto transfer to your savings and retirement accounts.  The goal is to get the money where it’s supposed to be before you convince yourself to spend it all.

4.  Track, review and reassess your finances at the end of each month.  Every successful company tracks money coming in and going out to determine if they are running a profit or loss. It works the same way for individuals.  Budgeting allows you to track if you are saving or overspending so that you can adjust the way you spend accordingly.  

When you budget, you commit to being accountable and responsible for your spending. There are innumerable free budgeting apps and online resources out there to help you get started with budgeting.

Each person’s finances are unique. The key is to create a budget and stick to it, only allowing room for small mistakes and minor changes along the way.  Done correctly, budgeting is the best tool to get you to your financial goals. Just remember, you are the only one who can decide to create and stick to your budget.

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