Simple Budget Help

Photo courtesy of eric731

Getting budget help can be an essential part of your finances especially when you are dealing with debt or a financial shift in your life. Or, you may be seeking better ways to save money.

We never had a budget. But, once my wife quit her job, we knew it would benefit us to understand our finances with greater detail. We needed budget help. We wanted practical ways to save money.

Our financial adviser, Nate, had us fill out some budgeting tools. We filled in all of our financial information such as our:

• Mortgage payments
• Car payments
• Insurance costs
• Credit card payments
• Dining out expenses/groceries
• Even pet expenses!

Doing all of this consumed a lot of time. It was not a fun process. But, knowing where we stood financially was worth it all.

Getting the hard numbers created an awareness around our financial position. This awareness, just like freedom, creates choices. If we don't know where we are in the map, how do we know where we are going?

What to Do

Here are some steps to take when determining and adjusting your budget to fit your needs.

• Gather - Gather all income figures. You can include personal as well as business earnings.
  
  Gather all expense figures. Use your mortgage, bank, credit card, and other statements. We suggest labeling your expenses. Classify things like entertainment, food, dining, pet food, etc. This process helps you see if you are spending too much in a certain area.
  
  
• Label - Label each expense under 3 categories: Productive (P), Consumptive (C), and Destructive (D).
  
  Productive expenses are things that are essential to living or help you become better in certain aspects of your life. These are things like life insurance, your mortgage, music lessons, clothing, and the Internet.
  
  Consumptive expenses are things that help you consume but deliver no essential benefits to your well being. These are things like excessive shopping, cable, dining out all the time, and lavish vacations.
  
  Destructive expenses are things that decrease your lifestyle and would behoove you to spend your money elsewhere. These are things like gambling, drug use, and excessive bank fees.
  
  Be honest in your labeling.
  
  
• Calculate - Run your figures. Take your income minus expenses. If you end up with a positive number, then you are positively cashflowing: Good! If you end up with a negative number, then you are negatively cashflowing: An opportunity for change and growth.
  
  
• Adjust - If you are negatively cashflowing, take a look at the expenses that you have labeled D (destructive). These are expenses that you can do without and will benefit your lifestyle.
  
  Next, take a look at your C (consumptive) expenses. Determine which ones you can live without.

  And, if you have extra cash, learn how to pay off credit card debt using our DOLP™ calculator.

  If you are positively cashflowing, that does not mean there isn't room for improvement. Take a look at the same labels and see where you can make your adjustments.

Seeking budget help gives you the head start to efficiently and effectively track your income and expenses. Sure, there are ways to make quick money. But, if you don't know where your money is going, you may miss where the leaks are.

Knowing the figures and where you stand financially makes your journey towards financial freedom a smoother one.

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