You’ll want to stash this money away in a separate account to use as an emergency cushion, as well as the retirement account you should be contributing to at work or on your own.
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15% Transportation - You’ll want to count your car payment, if you have one, and also rides via Uber or taxi, plus parking costs and car insurance premiums.35% Housing – This includes your rent or mortgage, the cost of insurance for your home or apartment, taxes, utilities and other maintenance costs.
Keep a running list on the notes app on your phone to track everything from your child’s guitar lessons to take-out lunches. And by track your spending, we mean every time you take out your debit card, or a credit card or use Venmo or Paypal or Apple Pay – whether it’s for $4 or $40 – jot it down. To do this, review recent credit card statements to see what you spent your money on, and then track your spending for the next month. And, it also will help you find money you can save for the future. This is often the most crucial step to climbing out of debt. Then, take the time to understand exactly what you’re spending money on. If that amount changes from month to month, come up with the yearly average so you’ll know exactly how much you’re working with. Do you run an Etsy shop on the side? Have rental properties? Sell vintage toys? Add it all up. What you’re bringing in each month should include your take-home pay, and any other sources of income you may have. Here are tips for creating a budget (also known as a spending plan) you can stick to in the new year: Assess your earningsįirst, ask yourself how much you’re bringing in each month, how much goes out – and when you spend the money, where it’s going. It’s a liberating first step to financial freedom everyone should experience. Watching your savings increase can also begin to offer peace of mind that means you won’t have to turn to credit cards and ultimately more debt the next time an emergency comes up. You begin to feel a sense of control over your money that may not have been there before. That awareness can – and often does – lead to better spending and savings habits.Īnd when you begin saving regularly and placing the cash in a separate savings or money market account, something else happens.
Maybe it’s because you gain a better understanding of exactly how much money you have coming in and going out. Something powerful often happens when you begin keeping track of how much you earn and spend week after week and month after month.
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