Personal Finance

To become financially fit, learn how to live within your means and create a realistic budget that allows you to save, invest and enjoy your money. — Lois Vitt

Create a Budget

A budget can help you pay your bills on time, cover emergencies and reach financial goals. Start by paying attention to where your money is going. For one month, carry a small notebook and keep track of all expenditures and money withdrawals. This includes every check you write and every card you swipe. At the end of the month, go through each item in your notebook. Highlight the essentials–mortgage, rent, utilities, car loan, insurance–and take a close look at the remaining items. Try to identify your “latte factor” –those expendable items you buy on a regular basis that add very little to the quality of your life. It could be a latte, cappuccino, DVD, chocolate bar or shoes. Calculate the annual cost of the latte factor. For example, if you buy a $4 coffee each day of the work week, the annual cost will be over $1000. Decide which expendable items can be removed and create a simple spending plan that will allow you to save money and still enjoy your life. Consider using money management software to make the budgeting process an easier one.