Money Stress? Don't Worry!

Do you get paid on Friday and at the end of the weekend wonder what happened to all your dough?

Avoid living paycheck to paycheck and take control of your finances with a budget.

Do you spend without really tracking what you’re buying? Then look back at your receipts and wonder how you spent $50 on cappuccinos in a week.

You need a budget.

It’s a basic personal finance tool that most of us don’t use. To many of us budgeting seems tedious and daunting and a little anal retentive.

But budgeting can help you weed out frivolous spending, increase your savings and build your long-term personal wealth.

You can start the budgeting process by writing down all your monthly expenses. That way you actually know how much you have going out the door each month. And how much you then have left over.

Divide your budget into four parts:

1. Fixed expenses – things like rent, phone, internet and gym expenses that cost the same every month.
2. Variable expenses – bills such as electricity and groceries, which you pay each month, but the amount you owe may change.
3. Savings – Long-term retirement savings, short-term savings, emergency fund
4. Entertainment – Money you spend on items that aren’t necessities – going out to dinner, clothes, extra-curricular activities

Have your savings taken right out of your paycheck and deposited into separate accounts. That way you never see it, and never miss it. It’s the pay yourself first philosophy.

You can do the same thing for many fixed bills as well. Have bills like your mortgage and gym membership debited directly from your account. That way you’ll always be on time.

Budgeting is probably most helpful in controlling those frivolous expenses we make without thinking.

The entertainment category in your budget gives you a set amount you can spend on items that aren’t necessities. If you know you only have $200 to spend on that stuff, you hopefully will think a little harder about what you’re buying.

Shoes or cappuccinos? Shoes or cappuccinos?

Budgeting can also help control credit card use. Many of us turn to credit cards because we don’t manage our cash well. Credit cards become our crutch for bad spending habits.

You can do your budget on a basic word processing system. But the Internet is also filled with sites with free budgeting tools. Some will even analyze you’re spending and give you suggestions on where to cut back.

Here are some of the budgeting tools I recommend:

• www.kiplinger.com/tools/budget
• www.mint.com/personal-budget-planner/

Stop living paycheck to paycheck. Take control of your finances with a budget.

Life is too short to let money stress you out!

Share with us your thoughts on this article ...

Jenny