Life was easy when your only obligations were a portion of the rent, cable and utility bills with an occasional trip to the grocery. Nevertheless, adulthood beckoned and it’s time to create a budget and pay bills on time, every time. Now that you're either a homeowner or saving for your first home, sticking to a budget and paying bills is important to your financial well-being. Creating a budget will curb your spending and help launch a savings plan that will lead you down the path to financial stability.
Determine Your Expenses
Create a spreadsheet listing your monthly expenses. Name one column “Expense” and a second column “Amount.” List all of your bills and living expenses under the "Expense" column and input an average monthly dollar amount in the "Amount" column.
Save your gasoline, entertainment and grocery store receipts for one month and average the monthly cost of each. Add these expenses to your spreadsheet. Sit down with your spouse or significant other and think of other expenses you have such as medical costs, credit card balances, pet care, child care, insurance, gifts, car payments and student and other loans. Add these to your list.
Put Tracking in Place
Add a third column to your spreadsheet called “Due Date” and write down the due date of each of your bills. Divide the rows into two groups on the same sheet — living expenses and everything else. Put the core living expenses first and include inflexible bills such as mortgage/rent, installment loan payments and insurance that are paid first. The second group would include anything with room to tweak as your budget allows such as food, entertainment, cash, gifts, credit card expenses and gym memberships.
Pick an online site or software program, such as Mint or Quicken, to maintain your checkbook electronically. Both offer automated balancing of your checkbook and methods to track where your dollars go. It’s up to you to keep this system current. Set a time to update it each week. You can enter the information on your spreadsheet into these programs and use their budgeting tools for enhanced review of your expenses.
Manage Your Spending
Work together with your spouse or significant other to set limits on flexible expenses and try to pay with cash as much as possible. If you use credit cards, set a monthly spending limit and pay the balance off when the bill arrives. Set up a savings plan and decide how much money you plan to place in savings and retirement accounts each month. Automate transfers to these accounts from your paychecks if available through your employer.
Pay bills on a regular schedule, weekly or biweekly, and from the same location, like your dining room table or home office. This will help you get into a routine. Decide who will be responsible for paying the bills, balancing the checkbook and making sure you are sticking to the budget. Set up online bill payments or through automatic deductions for your recurring bills.
Check your bank accounts online often so you always know how much money is in your account. Avoid late fees and increased interest charges by paying bills on time. Don't carry credit cards if they are too tempting to pull out and buy things you cannot afford. Don't stray from your budget but be honest with your spouse or significant other if you do.
- Check your bank accounts online often so you always know how much money is in your account.
- Avoid late fees and increased interest charges by paying bills on time.
- Don't carry credit cards if they are too tempting to pull out and buy things you cannot afford.
- Don't stray from your budget but be honest with your spouse or significant other if you do.
Francine Richards is a licensed multi-state insurance agent with years of human resources and insurance industry experience. Her work has appeared on Blue Cross Blue Shield websites and newsletters, the Houston Chronicle and The Nest. Richards holds a Bachelor of Arts in communications from the University of Maryland.