Why You Need to Keep a Household Budget Now!

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The deadline for filing income taxes is fast approaching. Tax Day reminds us that we work hard to earn a living. I don’t know about you, but since I work so hard, I want to make sure I’m spending every penny wisely. That’s where a household budget comes in. Budgets are a fantastic at a glance tool to visualize what we have coming in, what’s going out (and what that money is paying for), and if there’s anything left at the end of the month to put into savings.

Expense Tracking – Why is it Important?

The first part of budgeting is expense tracking. It may sound boring or tedious, but let’s consider for a minute what will happen if you’re not tracking your income and expenses. You don’t know how much you have to spend in a given month, and you could easily spend what you’re making for the month or even several months.
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What if you spend the money you need for bills? Where will the money come from? Over time that can put you into some pretty hot water financially. You may also be spending a lot more than you think on clothes, eating out, the movies, or your favorite bar. It’s important to have fun and enjoy life, but are you sacrificing your savings?
Having a budget gives us more control over where we want to really spend our hard earned cash. Maybe that’s dinner and a movie, but maybe it isn’t. Wouldn’t it be nice to have an actual choice?

What Does a Budget Do?

​A budget is by no means magical. It simply tracks your money. You write down all of the money coming in (income) and all of the money going out (expenses). You should start with your regular monthly bills like mortgage or rent, car payments, utility bills etc. What’s left after all the bills are paid is your discretionary income. From this record, you should begin planning a monthly budget that will keep you on task and on goal.

Budgets Help Identify Things You Waste Money On

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You might think you have your spending under control, but putting it down in black and white gives you a whole new perspective. You can visualize all of your expenses and see where the waste is. Seeing the numbers in front of you makes you ask yourself if you want to spend more than $200 a month on cable TV or $100 a month on a satellite radio subscription you hardly ever use. You probably have subscriptions for magazines you don’t read or spend money on clothes you hardly ever wear. Go through your expenses and reevaluate if this is REALLY how you want to spend your paycheck.

Home Budgets Allow You to Save Proactively

Creating a home budget may seem tedious or difficult at first, but it’s pretty hard to save money without keeping track of it. We go in with the best of intentions at the beginning of the month, but somehow there isn’t anything left at the end of the month.
A budget gives you a chance to be a bit more proactive. If you know how much you generally spend, then you know what you should be able to put into savings regularly. Rather than wait until the end of the month, set aside some money for savings at the beginning of the month, even if it’s just $20. Put it in the budget as a regular expense, just like you do with your other urgent bills. If you need to, open separate savings account so you’re not tempted to spend it.
Just remember, whatever amount you can afford to save, it’s better than nothing at all. Sometimes we’re tempted to just say “forget it” when we can only put a few dollars a month aside, but we really need to get into the mindset that it accumulates over time.

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A Household Budget Keep You From Spending More Than You Make

Most importantly, your budget will keep you on track and help you make sure you’re not spending more than you’re making. That’s pretty important for your financial well-being! It may sound like common sense but it’s just so easy to exceed what you’re earning. ​

Analyze Your Household Budget

  Are you spending a lot, or maybe even more than you make on your recurring bills? Or, maybe you just want to find a way to save a bit more. This is the time to analyze your household budget thoroughly. Are there things you can cut out or places you can cut down? No matter what the case may be, this is a good time to assess the state of your finances and what you’d like them to become.

Use Tools to Help You Keep Track

Remember, even the most frugal person needs tools to keep them on track. Download a budget template complete with a checklist and instructions to start your journey to financial freedom! Find them on Patreon today.

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