Controlling Your Finances (Jan 2014)
Just thinking about creating a budget is enough to make most people cringe. Some may believe they will be forced to live on beans and rice while others just don’t want to see how much money they waste each month. The reality is that creating a budget is simply telling your money what to do rather than trying to figure out where it went at the end of the month. Spending changes will likely need to be made, but the good news is that you get to choose what the changes are.
The first step in controlling your finances is to figure out where your money is currently going. If you use credit or debit cards, you automatically have a history of your spending. Accounting software and some internet-based programs can automatically categorize your spending based on the information in your bank account. Some adjustments may be needed such as groceries purchased at Wal-Mart may simply be categorized as shopping, but you can get a good estimate in a few simple steps. Another option is to keep a spending diary by writing down purchases whenever they are made.
Once past spending is understood, it is time to create a plan.
- Figure out what is reasonable and where cuts need to be made.
- One family may choose to stop eating out in order to keep cable while another uses eating out as social time.
- Either cutting off cable or going to basic cable and using a service such as Netflix or Hulu Plus can significantly reduce monthly bills.
- Shopping around for homeowner’s, renter’s, and car insurance is another easy way to save money.
- Use the forms to create a spending plan located on the right side of the Financial Counseling web page at http://www.uky.edu/HR/benefits/financial_tips.html.
- Remember to save for irregular expenses such as car taxes and gifts.
- Put money in a savings account for these things each month and it will be there when the expense arises.
- Finally, create an emergency fund to avoid going into debt for things such as new tires or an unexpected vet bill.
For more information on budgeting, retirement, and other financial concerns, go to http://www.uky.edu/HR/benefits/financial_counseling.html.