Being organized means being proactive — in every area of your life. This includes your finances. If you’re just drifting along with no real idea of where your money goes, you’re not organized. This easy step-by-step budgeting system will give you peace of mind and more cash in your wallet.
know what you hope to accomplish financially before beginning your budget
are you trying to pay off your debts? reduce your expenses? save for retirement?
list your financial goals for the next 6 months, 1 year, 5 years, 10+ years
don’t worry about feasibility — where there’s a will, there’s a way
start with a sheet of legal paper — or a spreadsheet program
create 12 columns, one for each month of the year
label each row for a different living expense — groceries, gas, mortgage, etc.
think in terms of categories that you can divide in to subcategories
for example — “automobile” includes gas, repairs, insurance, registration, etc.
first objective — create a list of static expenses (items that cost the same every month)
static expenses include rent, mortgage, car lease, student loan, etc.
second objective — evaluate your variable expenses (items that fluctuate every month)
variable expenses include groceries, utilities, entertainment, clothing, etc.
third objective — go through last year’s bills to find any large and unexpected expenses
unexpected expenses include car repairs, medical bills, fines, etc.
tally your irregular expenses and divide by 12 for an idea of how these costs spread over a year’s time
avoid impulsive spending — an organized budget requires proactive rather than reactive behaviors
you want to make conscious decisions about how to invest your resources — think it through first
clear up any financial disorganization that costs you money — interest charges, late fees, etc.
pay attention to where your money actually goes — track every single penny you spend for a month
look at each expense and ask if you get a tangible benefit from it
ask if that expense is worth the time you have to spend earning the money to pay for it
if the answer to both questions is yes, great!
if not, that may be an expense you could let go of without much pain
list out all of the balances you owe on every credit card and loan
make note of the interest rate and APR charged by each
pay the minimum on all of your debts except the one with the highest interest rate
pay as much as you can afford to on the highest interest rate account
when that debt is paid off, apply the money you were paying to the next-highest rate account
keep working your way down the ladder until all your debts are paid off
you can’t create a budget until you know exactly how much you earn — take-home pay
calculate your income after taxes and Social Security are withheld
also take into account any other company-related withholding — health insurance, 401K, etc.
include only regular sources of income that you can count on
compare your monthly income to your monthly expenses to see where you stand
if you are in the black (more income than expenses), begin committing some money to savings
no matter how large or small an amount, savings is a priority
build your savings and investments into your budget like a bill
pay yourself first before paying anyone else
the goal is to have at least 10% of your income going into savings
if you are in the red (more expenses than income), your goal is reducing your spending
decide which expenses are necessary and which waste money without giving you any tangible benefit
start first eliminating incidental expenses — sodas, snacks, magazines, Starbucks, etc.
also consider ways to reduce larger expenses — cheaper housing, give up one car, fewer vacations
< 30% of your income should be spent on housing, < 30% on household, and < 30% on other bills
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Ramona Creel is an award-winning 15-year veteran organizer and member of the National Association Of Professional Organizers. As well as having birthed “The A-To-Z Of Getting Organized,” Ramona is also the author of “The Professional Organizer’s Bible: A Slightly Irreverent And Completely Unorthodox Guide For Turning Clutter Into A Career”—and the creator of more than 200 “quick-start” business tools and templates for use by productivity professionals. She writes seven different blogs, has worked with hundreds of clients, and has delivered scores of presentations on getting organized. Ramona resides on the roads of America as a full-time RVer—living and working in a 29-foot Airstream. Learn more at and RamonaCreel.com.
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