Creating a Budget

Budgets are not a very exciting part of being a responsible adult, but they are crucial. Without a budget, it is very easy for a person to get off track with his or her finances. This results in debts and inexplicable charges on credit cards that add up very quickly. When done well, creating a budget can take less than an hour and be very easy to stick to.

Much like taxes, the first step to creating a budget is to gather every single financial statement available. These include bank statements, investment statements, utility bills, and any other bills that are available.

After all of the financial statements have been gathered, it is time to record all sources of income. Pay stubs need to be gathered and totaled into a monthly amount of cash coming into a bank account. Next, create a list of monthly expenses. Mortgage payments, rent, car payments, insurance, groceries, coffee, entertainment and everything else need to be accounted for or the budget won’t be accurate.

After a list of expenses is created, the list needs to be divided into fixed expenses and variable expenses. Fixed expenses are expenses that stay about the same on a monthly basis. Things like rent or mortgage payments fit into this category. Variable payments vary. They change and include items like gasoline, groceries, entertainment, and gifts. This second category is very important for making adjustments because it can be altered.

The total expenses and total income columns need to be compared. If the numbers are bigger on the expenses side, there need to be some adjustments made, and fast. If the numbers are bigger on the income side, then you extra cash to save or invest. The excess money can be put into a retirement account or used to pay off more on credit card bills or a mortgage at a time.

Once everything has been examined, the task is not over. The budget needs to be reviewed on a monthly basis to ensure that nothing gets out of line.

Contact a Boston Bankruptcy Lawyer

If your expenses greatly outnumber your income to the point that you are considering filing for bankruptcy, contact the Boston bankruptcy lawyers of Joshua Spirn & Associates at 1-800-975-5346 to help get you back on track and to determine the best form of bankruptcy for you.