Budgeting
Step Two: Add up your income
This is straightforward enough. Just get a sum of all your sources of net income(after taxes and deductions). Some common sources of income include:- salary
- bonus pay
- interest and dividends
- alimony or child care
- public assistance
Step Three: Make the budget
Here is the moment of truth. Subtract your expenses from your net income. If you spend more than you make, you obviously have to cut back somewhere. But even if are doing okay, I'm sure you could do better and end up with more money in your pocket.
It's time to cut back on all those frivolous expenses. Surprisingly, the biggest budget busters are not one-time, big purchases such as a new TV set or a vacation. The inexpensive, regular, seemingly innocent purchases that people make guilt-free chip slowly but surely chip away at that stash of cash. For instance, if you pay $2.00 on coffee and a bagel every work morning, you spend $520 a year when you very easily could have had those at home.
Look long and hard at your list of expenses. What is unnecessary? Do you really have to eat out that often? Perhaps a movie rental rather than another night out at the theaters could do. Did you really need that new outfit? Of course, you don't have to go overboard and just become cheap. A splurge here and there is perfectly okay. Just don't break that budget! You'll thank me later when you can enjoy your retirement instead of hoping Social Security will still exist.
So there you have it. You've made your own budget. Easy, huh. Now go out there and treat yourself to something nice. ;)