Creating (and Sticking to) a Budget for Financial Health

A budget is a smart and easy step toward financial health regardless of where you work or what you earn. Simply put, a budget is an itemized summary of your likely income and expenses during a given timeframe, such as monthly or annually.
Whether you create it in a spreadsheet or handwrite it in a notebook, a budget gives you an overview that helps you:

• Set and adhere to spending priorities like rent, food, utilities and insurance.
• Reduce debt like credit card balances or student loans.
• Plan for emergencies like car repairs.
• Work toward personal goals like taking vacations or buying a home.

When you break down your expenses in a thoughtful manner, you might be surprised to see where your money actually goes. For example, buying a large specialty coffee before work each day can add up to $25-$30 a week, while a pound of ground coffee from the same coffee shop costs as little as $10. Going out for fast food can cost double and triple what it costs to bring lunch from home. Conversely, if these expenses are important to you, you can identify other expenses to cut.
For a budget to work, you have to keep accurate track of expenses. Using cash for purchases is one of the biggest budget busters unless you conscientiously keep receipts and jot down what you purchased. This also entails assessing how often your use your ATM card and for what reasons.
There are a number of free online resources that can help you identify common budget line items and spark your thinking about any specific expenses you incur. Remember that a budget is a living document that can be changed as your circumstances change, such as getting a new job or having a baby.

• Budget Planning Worksheet
• Sample Budgeting Categories

In the end, you may find that a budget greatly reduces your stress around money management because you’ve taken control of your own finances.