Getting Started
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A good budget should start with an evaluation of your goals. Do you want to get out of debt? Give more to charity? Save more for retirement or your kids’ college funds? Afford a home? Whatever your goal, remind yourself of it often when allocating your money and sticking to your spending plan.
Knowing why you’ve chosen to develop and follow a budget helps you cut back on your variable expenses. Variable expenses are those that change from month-to-month, unlike rent, car payments, student loan payments and day care, which are fixed expenses. Variable expenses—think clothing, entertainment, food, fuel, dining out, gifts—can be trimmed down, giving you more money to meet your goals.
Also, as you think about your budget, make sure you’re putting money toward basic needs as opposed to wants. A good guideline to follow is the rule of four F’s: fortress, food, fuel, and financial stability. Your fortress is your home, so whatever you need to spend to keep it up and running is a necessity. You must also eat, so food is a priority. Fuel gets you places, so money spent on transportation is a must, whether it’s your own car or public transportation. Your financial stability is important for both your present situation and your future. Building an emergency savings account, paying down high-interest debt and saving for retirement are all actions that strengthen your financial stability.
