Learning About Your Credit Score
If you find yourself short on cash and working paycheck to paycheck and are not sure where your money is going, it’s time to look into a budget. When you first hear the word budget it probably makes you cringe and you start thinking of all the things you will have to give up. This simply is not true, instead you should look at a budget as a way to take hold of your finances and reclaim your freedom from your loans with bad credit.
When you are first creating a budget you need to take a look at your monthly income versus your outgoing, or spending. There will be some consistent items that you know what time of the month they happen, and how much. You can use a spreadsheet, a notebook or online software to help you create a budget. Let’s assume you are going to use a notebook and paper. Start by establishing how much money you have for the month. If you are getting paid every two weeks, it can be helpful to create a monthly budget that you can then divide into sections, such as the first half of the month and the second half.
With each section add in any bills that are due in that period. It is a good idea to set aside some money in a savings account, which can act as an emergency fund; in case your car breaks down or an unexpected bill shows up. Don’t forget about gas and groceries, if you aren’t sure how much you spend, consider averaging your last few trips.
Once you establish the minimal amount of money you need to spend each month you can start to look at other areas of spending. Now this is where your spending history comes into play. Take a look at the last few months of purchases that were not bills; do you get a daily coffee fix from the drive-thru, how about going to the movies each Saturday with friends? Create a list with each activity you did and an average of how much you spent over the last three months.
Are there areas where you are spending more than you thought? Swiping a debit or credit card can make it harder to really think about how much you are spending. Now that you have your expenditures listed take a look at the money remaining in your budget and consider how you want to distribute it. This is the time when you might be able to make changes that can save you money. Instead of heading to the local coffee place, consider making it at home. Want to hang out with friends? Consider a movie night at your place instead of going out to the theater.
Having created your budget, the next part is sticking with it. While managing a budget can seem like a daunting task, the important thing is to stay up to date on your spending. Keeping track of where your money is going may help you decide on just where and how you want spend it.