If you are just starting in your new job, just got married or starting a family, you are probably overwhelmed with various expenses. There are many times you wonder where the money is going?
It’s surely important to work hard to get promotions at work, bring home bigger pay check. But if you don’t get a handle on the expenses, they will expand to fill the income.Start keeping track of all the expenses
- Car loan
- Mortgage
- Credit card bills
- how often you eat out
- monthly grocery bills
- Entertainment
- Auto Insurance
- Utilities
- Rent
and many more
Go through old receipts to see if there are extraordinary or special one time expenses. A sudden auto repair means you will have to rent a car or get it done. Planning for these unexpected expenses is important. The rule of thumb I use is to reserve about 10% of the yearly expenses for the unexpected category.
Use Mofinto. Add yearly expenses but be sure to itemize these. It will automatically calculate the yearly expenses and also keeps track of inflation effect on the expenses over next several years.
Once you have a good idea of all the expenses, make sure your income is more than expenses. If the cash flow is positive, meaning income is more than what you spend, congratulate yourself on a job well done. You are ahead of the game. All you need to do is invest the savings wisely.
If on the other hand, you are seeing negative cash flow, it’s time to start by reducing expenses. Start cutting down on discretionary expenses like travel, entertainment etc. Reduce your frequency of eating out.
You will be surprised how easy it is to fix the budget problems once you do realize there is a budget problem.
Planning is simple if you are disciplined.
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