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For many of us, creating a budget seems like a chore; sticking
to one is like being in prison. Yet sticking to a budget
doesn't have to be painful. In fact, a budget can give you
lots of benefits.
A budget can give you the
financial freedom to make better choices.
It can help you control
your finances--instead of letting them control you!
How? It shows you where you're spending
(or over-spending). You'll understand, perhaps for the first
time, why you can't seem to scrape up a down payment for
a new car or save enough for a vacation. Budgeting
helps you discover where you're wasting money. You might
be able to eliminate expenses that aren't important to you
and free up more money for those that are.
Most of all, a budget is a big first
step on the road to a financially secure future. Now that's
worth a little effort, don't you think?
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A budget can help you:
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Get control of finances
Keep out of financial trouble
Become a better consumer
Set and achieve financial goals
Pave the way to a secure future
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especially if you...
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Are afraid to look at your finances
Know you're already spending too much
Scrape together funds for basics each pay period
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Don't have enough for a rainy day (or a sunny
retirement)? Are you already in financial trouble?
What's a budget?
A budget is a way to help
you organize your finances. Essentially, it tells you what
money comes in, what money goes out and where the money
goes.
A budget is pretty simple to put together.
All you have to know is basic math. Once you set it up,
it's easy to maintain. The hardest part may be pulling together
all your expenses. But, over time, you'll be able to get
more accurate about your expenses.
Are you ready? Let's begin.
Step I: Set your goals.
You can't get anywhere
unless you know where you're going. So, the first step is
figuring out your goals. There are three types of goals:
Short-term
goals--These are goals that you'll achieve in
the next year or two. An example might be "Pay off
my $1000 in credit card debt" or "Save $750 for
an emergency fund."
Mid-term goals--These are goals that you want
to achieve in the next 2 to 5 years. For example, "Save
$10,000 to remodel the kitchen" or "Save $15,000
for a down payment on a house."
Long-term goals--These are goals that will
take more than 5 years to save for. Examples may include:
saving for your retirement or paying for a college education
for your children.
To figure out your goals, you should
ask yourself: What's important to me? What do I need? What
do I want? If you're married, you and your spouse should
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