4 Steps to Budget Easy

GTE University

A budget is basically a list of your expenses (gas, rent, cell phone bill, etc.) compared to your income during the month so you have an idea of how much money you’re going to spend…before you actually spend it. But how many people actually do this?

According to our sources, 42% of Americans do not follow a budget. With a true and realistic budget, you can keep yourself from ever saying “I’m tired of living paycheck to paycheck”, or worse, “I don’t have enough money to pay that bill.”

We have simple steps to follow to help keep your finances in line.

Step 1: Identify your largest expenses and how much they are each week or month.

Think about your needs or necessary expenses. Identifying these is helpful because after you account for them you can determine how much “extra” money you have. You can break it down weekly or monthly, whichever you prefer.

Step 2: Identify your leaky faucet- the places where you’re spending your “extra” money.

Sometimes you may not even realize how much you are really spending on these items.

  • These are what we like to call your wants, and controlling or curtailing them is generally the easiest way to reduce your overall expenses.
  • Asking yourself, “Can I survive without this item?” is a great way to identify your needs versus wants.
  • The most common leaky faucets are food and entertainment. Groceries or food is a necessity, but certain things sneak in with the essentials. A 6-pack of Red Bull each time you grocery shop isn’t truly a need, it’s a want.

Step 3: Take action!

Now that you know your “fixed” expenses (your necessities/needs) and have considered your wants, come up with alternative choices or ways to change your spending habits.

  • For example, instead of buying 24-pack of water bottles each week, invest in a “bubble” bottle as a way to have filtered water throughout the day. Or pack a lunch instead of eating out every day to reduce the amount of money you spend on food.

Step 4: Make your money work for YOU by saving it.

Instead of spending money on all the unnecessary little wants, put it in a Savings account. Putting it into a separate savings and out of your checking makes you less likely to spend it. Out of sight, out of mind. Let your savings accumulate and in time you’ll be able to buy all the wants you desire!