Planning for and recording the finances associated with your personal life and work alike can seem like a daunting task. However, it’s important to stay on top of your finances, and the records you create will help immensely when tax season comes along. These tips and resources should make the process easier and more manageable.
General Budgeting Tips
- Evaluate your spending. First, make a master list of all your expenses. List living expenses and necessities first: rent, mortgage, food, utilities, taxes, clothing, insurance, medical costs. Then add a line for entertainment. Finally, the last line should be for investments and savings. If you budget for investments and savings as a regular expense, you'll be more likely to set money aside.
- Earmark a percentage of your income for each expense. Figuring out how much of your income goes toward each expense is a key step in developing a successful budget. Once you have done so, if you classify expenses as either fixed or flexible, it will be easier to make cuts. Remember, it is generally flexible expenses that erode earnings.
- Rank your spending priorities. Label your expenses according to importance, from "essential" to "unimportant." You can then look at eliminating some lesser-important items, which may free up enough funds for a modest investment program.
- Pay yourself first. Write a monthly check to a special account rather than leaving the amount in your regular checking account. Your special account could be a savings account, money market fund, or Individual Retirement Account (IRA). Alternatively, many insurance companies and mutual funds have monthly checking account deduction plans that allow you to make a regular contribution to a wide variety of funding choices. However you choose to do it, paying yourself first is the foundation of a disciplined approach to savings.
Mint brings all your financial accounts into one place, where you can set budgets and track your spending. The service is 100% free, and uses the same security that regular banks do. http://www.mint.com
Similar to Mint, online money management service Bundle adds a social aspect to the online budgeting. With Bundle, you can see data from your city, and improve your budgeting by seeing what others are doing. Like Mint, bundle is free of charge and uses bank level security. http://www.bundle.com/