Home Budgeting in Troubled Times – 5 Simple Keys to Budgeting Success

Most people don’t enjoy doing, but retirement planners and financial advisors will inform you that home budgeting is one of the cornerstones to financial freedom. Over and over, when individuals are asked about their finances, as to what would most help their financial situation, the answer is extra income each year. This seems to be accurate across all brackets of wage earners.

I find this very compelling because it indicates, in many situations, the problem lies with home budgeting not income earning. Budgeting money appears to be the problem or else you would not have households earning $50K or $75K or $100K, all saying they need an extra $25K a year to solve their home budgeting problems. If the earnings where actually the issue then the higher bracket earner would not have issues but I have learned from experience, home budgeting problems exists amongst all wage levels.

Here are 5 simple steps one should follow to get on the road to improve their home budgeting process.

1. Awareness – I have found in working with others that this is the number one block to successful home budgeting. Most people simple do not track accurately what they are spending. For the next 30 days, write down everything you and the rest of the family are spending money on.

2. Prioritize – Next, once you see what you are spending money on you need to evaluate whether that purchase was a need or want. It will be eye opening to many to find out what they have been spending money on.

3. Goal Setting – Be realistic in what you cutback on and have an end goal in mind. Household budgeting should not be a painful practice where all the fun is taken out of life. It is merely a way to prioritize your wants so that you can get the most out of your life. Are you doing it to retire sooner, reduce debt, buy a home, etc…?

4. Monitoring and Tracking Results – Once you have started this process you will find it far easier to stick with, if you have the tools to track and follow how you are doing. There are many budgeting software programs and spreadsheets available at little to no cost.

5. Get Your Family Involved – Unless you are single, having the rest of the “team” onboard is essential if you want to achieve long term results. It is never too early for kids to start to learn about money management.

Start today with #1 above and get on the track to financial independence.

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