By M Katie Helle, CPA –
Understanding your finances takes practice and patience – which is learned from experience and typically does not come naturally for most. The best way to plan and track your finances is to use a budgeting tool.
When setting up a budget, there are four basic steps you will want to use to create a budget:
- Determine what your monthly net income is. This is the income you receive after taxes are withheld.
- Track your spending by listing all your fixed and variable expenses. Fixed expenses are considered regular monthly bills such as your rent, car payment, or utilities. Variable expenses include items such as gas, groceries and eating out.
- Determine your short- and long-term financial goals.
- Make a plan with the information in three steps above.
When creating a budget, it is much easier to create your plan in a document such as Microsoft Excel or find a free cloud-based software where you can track your spending. There are many free downloadable templates available on the internet. For those who are a little more tech savvy, Mint by Intuit offer’s an excellent budget tool where you can link your accounts, loans, and investments to track goals.
Once you have your budget created, you will want to continually review to ensure you are tracking expenses and are on target for meeting your financials goals. With practice, budgeting and goal setting can really be an enjoyable experience.
Below are some additional links that you may find helpful with your budgeting journey.