Buying a home is a personal goal. You need to have enough money to achieve it. A good budget will help you keep your spending on track and help you free up money to reach your homeownership goal.
Do you know where your money goes?
Budgeting is about understanding how much money you have and where it goes, then coming up with a spending plan that works best for you. Making even small changes can have a positive impact on your overall financial situation.
A budget is a practical, hands-on planning tool that can help you:
- Gain control of your money.
When you have a budget, you know how much you have to spend, and where and when you spend it.
- Ensure you are living within your means.
A budget will help you implement smart spending and saving habits.
- Achieve your goals.
A budget is an action plan that can help your homeownership goal become a reality.
Creating a budget and sticking to it doesn’t have to be complicated, but it does require some discipline. Here’s what you’ll need to do:
- Note all of your sources of income.
- Make a list of monthly expenses.
- Break expenses into three categories:
- Fixed — essential expenses that are not likely to change, such as rent, car payments, and utility bills
- Flexible — also necessities, but the amount may change from month to month, such as groceries, gifts and medical bills
- Discretionary — money you choose to spend but don’t have to spend, such as movies, new clothes, and eating out
- Total your monthly income and expenses.
If you are showing higher expenses than income, it means some changes will need to be made.
- Make adjustments to expenses.
Look at your flexible and discretionary expenses to find areas to cut.
- Review your budget monthly. Compare what you spent vs. what you planned to see where you did well and where you may need to improve.
Let Your Budget be Your Guide
Budgeting sets up money management guidelines for you to follow. It also uncovers hidden opportunities to get closer to your goals. But it needs to be flexible and realistic. Remember it’s a plan to help you reach your goals. It should not feel like a punishment. Small changes to your spending habits can make a big difference!
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