Nearly everyone wishes for more money at some point, even the wealthiest among us are essentially living on a fixed income. In other words, you bring in a certain amount of money each month, and when it’s gone, it’s gone. Accepting that reality is the key to living a happier, wealthier life. Keep in mind that your creditors don’t work for free, so spending money that you don’t actually have is also incredibly expensive.
Fortunately, getting your finances on track isn’t that difficult, and while there are spreadsheets designed to make the budgeting process faster and easier, all you really need is a piece of paper, a pencil and the desire to live within your means.
Putting your financial goals in writing can make them seem more concrete and achievable. However, it’s easy to allow everyday purchases and obligations to get in the way of saving for the future. One of the best ways to make sure your daily spending habits don’t overwhelm your life goals is to create a spending plan. A spending plan is not meant to be a strict budget. Instead, it’s a guide that will help you take control of your financial future and ultimately, reach your goals.
To create your spending map, follow these four simple steps
- Identify your Income:
There are a whole lot of sources of different types of income available from wages from an employer, self employment income, banks, brokers, sale of capital assets, freelance writing, offering skilled services such as resume writing, business consulting, blog development, logo design, turning your hobbies into ideal revenue generators like photography, videography e.t.c
- Make all list of all your regular expenses
Here are examples of your regular expenses: Utility bills, clothing and shoes, health expenses, car maintenance, personal care items, feeding, entertainment, transportation cost and any other miscellaneous expenses.
- Compare your Incomes and expense:
Write down your total monthly income and your total monthly expenses, then subtract your expenses from your income.
- Set priorities and make changes
After comparing your income and expenses, did you find that you have money left over at the end of the month? If so, great! Your income and your expenses are “balanced.” If you put the money left over at the end of the month into your savings toward one of your goals, you are well on your way to controlling your money and getting what you want out of life. But what if your expenses were more than your income? This can happen to anyone occasionally. But if it happens often, your budget is “out of balance,” and you are said to have a negative cash flow.
How do you get back in the driver’s seat and start moving toward your goals again? There are three ways; cut back on your expenses, increase your income, or do both.
Here are some ideas for cutting back on your expenses:
- Cut out on buying coffee on your way to work
- Take your own lunch to work
- Buy your foodstuffs in bulk
- Cook in bulk
- Share Car journeys: See if there are any other people who live near you so you can share journeys and cut your costs on fuel.
- Practice healthy habits, like exercising. You won’t need to see the doctor so often.
You should control your budget and allow it control you. When you stay within the limits of your income, you will never struggle with debt. And, you will never bust your budget, i.e Spending map.
You can share with us your own ideas of how you cut down on your spending.