Here are the Top 4 Ways to Take Control Over Your Budget:
1. Direct Deposit: If you don't direct deposit yet, you are wasting valuable time and possibly costing yourself over-draft fees. This seems simple, but add one more step. I suggest not only direct depositing your paycheck but setting up a savings/retirement deduction before your paycheck even hits your account. Contact your bank or insurance agency to see what Money Market, Savings Accounts or ROTH IRA's they offer, and the have at least $50/month out of your paycheck directly deposited to this savings or retirement account.
2. Auto Pay: Let's face it bills are just going to keep coming in, but now that your parents have relinquished control over your car insurance, rent and utilities you need to be on top of how these are paid. Having these payments set up on auto-pay through the company or bill-pay through your bank will save you time and money. Often times you can save a $1 or $2 monthly fee by auto-paying and eliminating your physical bill that comes in the mail. Don't worry, if your bill amount changes, most companies send you written notification.
Watch David Bach's (financial guru featured on the Today Show) best tip for budgeting: David Bach's #1 Financial Mistake to Avoid
3. Track Expenses: Now, I know not everyone actually enjoys balancing their check book or bank account like I do, but there are so many tools out there to make it super easy for even the most unorganized budgeter. Let's face it, we forget about those little "swipes" we do multiple times a week for a snack at the gas station, a Starbucks latte or sub sandwich. If you want to actually write it down (experts say writing it down will make it more real!), then I suggest using a Budget Organizer. I bought my Meade Budget "Organizher" at Target and you can download free inserts and make your own notebook, using their website: Mead Home Manager
If you hate writing down every little swipe, then use a site like www.mint.com which automatically pulls information from your bank account, credit cards, retirement accounts, and loans to analyze where your money is going. It also guides you to set a budget each month for individual expense categories along with tips for each of these categories.
4. Review at the end of the month: At the end of the month you want to see where your paycheck has gone. How much did you spend on eating out? Could you cut back to just twice a week? Are your bills being paid on time? Could you negotiate a lower rate on your credit card? Have you checked your credit report lately? These are the questions you should ask yourself, and you will be surprised at what your budget tells or even screams to you at the end of the month. If you aren't or can't save any of your paycheck then focus on paying down debt with the highest interest credit cards first, and you will be on your way to saving for retirement.
So you may be asking: Why is she talking about retirement to a bunch of 20-somethings who are just getting out of college and still trying to find a good paying job? Well, I will address the "why" in the next posting, but for starters NOW is the time to start thinking about retirement. Don't go blow your budget on weekend partying and trips to see your buddies in Colorado that are still just coasting through. If you want to be serious about working hard and setting up your future to be financially stable, the next steps you make during the rest of this decade of life are going to play a crucial role in how your paycheck gets spent no matter how big or small it is or will be.
References: Image location www.louisville.com
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