How to Budget Finances

Budgeting your finances is like giving yourself a new lease on life. It can also improve your relationship with your partner -- a study by researchers at Utah State University found that managing your finances can help your love life. The process of budgeting your finances isn't such a scary thought, as long as you have the right tools and a little time to sit down and sort through your records.

Step 1

Create a budget worksheet in a spreadsheet program. List all your debts and expenses along with the balances and monthly payments for each one, and total the amounts. Enter your monthly income as well.

Step 2

Create another worksheet in your spreadsheet that lists your goals for the upcoming year (short-term goals) as well as another list for your goals for the long term (over a year from now). For example, "Pay off credit card debt" or "Invest $1,000."

Step 3

Sort through your list of expenses, and start cutting costs wherever possible. This is your main budgeting task -- to make sacrifices in your current expenses to free up more money at the end of the month to help you reach your goals. Do this with your partner so that you can both get on the same page when it comes to your new budget plan -- for example, no more lattes every day.

Step 4

Subtract the total expenses (after cost-cutting) from your total household income to get a final listing of your total disposable income after paying all your bills. If necessary, look into ways to make more money, such as working more hours or taking on a part-time gig.

Step 5

Tackle your financial goals one by one in the order of importance you and your partner establish using the extra cash you've freed up in your budget. For instance, if your goal is to pay off your credit card debt, discipline yourself to add an extra amount to each monthly payment until the debt is gone, and then move onto your next budgeting goal.

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