Hi! This is Alfred on behalf of Expert Village. Now it is time to evaluate your current spending and set goals. …

Hi! This is Alfred on behalf of Expert Village.
Now it is time to evaluate your current spending and set goals. When I sat down to evaluate my spending, I was unaware of just how much some of life’s little pleasure was really costing me. Of course, you will want more than 1 months expenses to use as basis for figuring your budget. List your expenses for the past few months to get a better picture and continue to record expenses for several months as you develop your budget. Reviewing your expenses, you will see areas where you can reduce spending and increase your savings. You will also get a good idea of which expenses you can’t change. Now it’s time to create your budget.
Start by listing your constant expenses. Housing cost and car payments don’t change from month to month. Then set reasonable limits on the items that fluctuate such as food and clothing. The trick is living within those limits. Putting theory into practice can be difficult especially if you are not practiced at budgeting. Setting some goals will help you to stick with a plan. When it comes to spending money, human nature can cause you to be short sided.
If you have the money in your pocket and see something you like, the urge to buy can overpower your common sense. You need something to make the saving urge just as powerful as the spending urge. In an earlier segment, we talked about dream items that were out of reach financially or we thought we probably couldn’t get because they were too expensive. Those are things to put on your list of saving goals. The important thing is to commit to paper just what you are saving for and then keep the list handy for extra motivation. Often it takes 2 or 3 revisions before you can achieve a budget that you can stick to and it is very likely you will discover that some of the goals that you set were unrealistic. If so, ease them slightly.
No point in giving yourself a unreachable hurdle but neither should it be too easy.