Part 1 is: Make a budget and stick to it.
Making and sticking to a budget is the first step to staying out of trouble with money. Don't worry, it's not as scary as it sounds.
First, make a list of all the money you get each month and all the money you spend each month. List all of your income sources, such as alimony, child support, side jobs, etc., when figuring out your income. Make sure to include housing, food, transportation, utilities, entertainment, etc. when figuring out your costs. Sit down every night and write down your expenses to get a true picture of how much you're spending. Just make sure to keep your receipts. Find out if your income is enough to cover all of your costs. If the answer is no, then you need to cut some costs.
Adjust expenses. If the difference is small, you might have to cut back on things like entertainment or your cell phone plan. If the deficit is bigger, you might have to sell your car or move into a smaller place. Even if your income is enough to cover all of your costs, you may still want to cut some of the fat out of how you spend. This can give you more money for things like vacations or saving for your kids' college.
Also, think about whether you need to add any new categories. Some things that people often forget about are getting out of debt, saving for emergencies, and saving for retirement. A savings account for emergencies makes sure that you have enough money to pay for things like a car problem that you didn't plan for. This will keep you from having to use credit, which can hurt your budget quickly.
There are many reasons why you should stick to your budget. First of all, most people have set financial goals for the future that they want to reach. It could be a trip, a brand-new car, or going to college. People can save money to reach these goals with the help of a budget. Also, a lot of people are crushed under the weight of their consumer debt. Getting out of debt is almost impossible if you don't have a plan for how you spend your money. A personal budget will give you the structure you need to start getting rid of these high account balances.
If done right, a budget will let a person pay their bills, put money into savings, and pay off their debts all at the same time. So, it is in everyone's best interest to make a budget and stick to it.
