Budgets, budgets, budgets

“Start saving for retirement.” “Design your retirement strategy today.” “What does your future hold for you?” Sound familiar? It should — we’ve been inundated with messages about preparing for the future. It makes sense; preparing for the future is an excellent idea as long as you have the means to accomplish that. Simply put, do you have money to work with? The best way to find out is to start budgeting.

Why budget?

A budget helps you get the most out of your income. It can help you prioritize your spending, help save for emergencies, and even save for some fun! And a budget can also help you determine how much you can afford to start putting away for retirement. Where does the money go? Many of us don’t know what our budget is — we just pay as they go — and although we pay our bills on time and have a little left in the bank, it’s hard to know exactly how much money you have to work with.

How do I start a budget?

Organize about three months of your bank statements. Try to categorize where your money is going and see if there’s a pattern. Is your spending pretty predictable or are you inconsistent? If it’s inconsistent, look at six months instead of just three. The idea is to get a real sense of where your money is going and once you have a clear picture, then you can start to think about the long term. Do you have a big purchase coming up like a new house, vacation or new car? Maybe there’s college tuition in the not too distant future or maybe you’d like to retire early. Having a budget might make any of these objectives a little easier to achieve.

It’s not all bad news!

Even if up until this very moment you’ve never worked on a budget, you can start today and see some positive changes quickly. Carpooling with coworkers can help reduce the amount of money you spend on gas. If your style is to hit up the cafeteria at work for lunch (and even breakfast) try brown-bagging. It doesn’t have to be a drastic change, start with one or two days each week or maybe just purchase breakfast but bring your lunch. Love to read? Look for used book stores or the library. You’ll be amazed how little changes like this can start helping you save and help you reallocate that money for future events. Looking for more ways to painlessly save some money?

You don’t have to do this alone!

There are many tools and resources available to help get you started. Setting up a budget can take a little time and for the first few months may require a bit more discipline. Don’t get discouraged! Before you know it, setting your monthly budget will be as common as paying your bills and in the end, can really be worth the effort.