This article is provided and sponsored by:
ClearPoint Credit Counseling Solutions

Do you ask yourself where all the money goes at the end of every month? If so, you need a budget. This helpful tool tracks all of your financial information at a glance. Not only will it organize your finances and pinpoint ways to save money, but it will set you on the road to financial security.

Follow these six steps to create and maintain an accurate budget:

  1. Identify income. Write down your average monthly income. In addition to salary, think of all other expected sources of household income including tax refunds, raises, child support, etc.
  2. List expenses. Be honest with yourself about all household expenses, including eating out, salon services and hobbies. Consider all of your regular monthly bills like phone and utilities, and your debt to creditors through bank cards and other lenders. Remember to include period expenses like auto registration, property taxes, and car insurance.
  3. Pay yourself first. Make sure that your written spending plan allows for some money to be put aside in a savings account each month. Credit counseling advisors say that the amount is not as important as establishing the savings habit.
  4. Make adjustments. The goal is to adjust either your income or expenses to make ends meet. Making expenses fit into the available income is an art, not a science. If you’re short, your choices are to either increase your income or reduce your expenses.
  5. Dump the debt. If a large part of your monthly expenses goes to paying down debt, the most helpful step you can take to building a strong financial future is getting rid of that debt. A debt management plan (DMP) is one option that a credit counseling agency can provide. In a DMP, a credit counselor will work as a mediator between you and your creditors to make payment arrangements that are typically lower than what you are currently paying.
  6. Track your results. Check your budget monthly to monitor how much closer you are to reaching your financial goals. Your budget will quickly become your “good news” financial statement for the month!

A budget is a particularly useful tool for managing debt, because it helps you stay focused on paying off bills. It is powerful to see those balances drop month after month, knowing that you are achieving your goals by sticking to a realistic budget.

For more help with your monthly budget, use this free budget calculator.