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Thursday, February 21, 2013
While gathering your tax information, it’s a good time to look over your budget. Have your income or expenses changed in the last year? If so, updating your budget may be in order. Or if you don’t have a budget, you may want to create one.
The optimum way to create a budget is to look at your spending over the last year. If you don’t use a software program or other means of tracking your spending, gathering tax info provides ample opportunity to do so. If you have inadequate records, estimate your spending patterns.
The tricky part is to keep your budget below what you earn!! It certainly is a reality check to track your spending. Without trying, you can easily find yourself in debt before you know it. Sacrificing immediate pleasure for future security takes discipline, but the peace of mind is worth it.
As newlyweds, my husband and I developed our first budget using an envelope system. I had never been on a budget and chafed at the idea. However, as the amount in my clothes budget grew and I was able to buy a dress with matching shoes and purse WITH CASH AND WITHOUT GUILT, I definitely saw the benefits of sacrificing immediate pleasure!
Include in your budget short-term and long-term savings. Short-term savings is for replacing appliances, unexpected car expenses, etc., so you don’t have to go into debt when you have an emergency.
Long-term savings is for a down payment on a house, retirement, college funds and such. If your employer has a matching retirement program, enroll!! Starting early multiples your investments exponentially! Even if you think you can’t possibly afford it, do it! If you wait until you can afford it, it may not happen.
Determine the categories to include in your budget and assign an amount for each. Don’t forget to include occasional expenses – vacations, gifts, etc. Whittle down amounts until your expenses are less than your take-home pay.
It’s takes work to create and maintain a budget, but it keeps you living in reality!
More budgeting tips:
A Dozen Tips for a Less-Stressed Wedding
The Very Best Apps and Websites for Holiday Gift List Organization
Destressing School Shopping