STEP THREE

So here we are, you’ve tracked your expenses and you’ve set your goals.  Take a look at the average or monthly amounts from Step One and Two and come up with a budget based on those numbers.

Before you can go any further, you need to ensure that your expenses are not higher than your income.  If your expenses exceed your income, this is where you need to make some choices based on what you’ve learned when you tracked your spending.  If you still don’t balance, then you will need to look at increasing your income.

If your income exceeds your expenses, then you may want to review your financial goals and either add another goal or increase your monthly contribution to existing goals to achieve them sooner.

Take a look at your expenses to determine where your needs are and also look critically at the expenses that fall into the want category.   Can you reduce the want spending?  You may find that you can cut back a little more by reducing any of the want category expenses, things like grabbing a cup of coffee every day, or eating lunch out every day.

If you have children that pressure  you to buy things; try involving them in your budgeting process to help them understand that money does not grow on trees, that things cost money… in some cases, a lot of money.  Helping them understand how to manage money and how much things cost.  If they are old enough to get an allowance, you can have them budget their money right along with you.

Stay tuned for Step Four tomorrow!

 

Shelley