Tips For Creating Your First Budget

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

As children and young adults, we're often guided by our parents and others that we look up to when it comes to money related matters. Take a weekly allowance, for example - while the money was technically yours, chances are you had your parents help in deciding whether it would be spent or saved. 

But now let's fast forward a few years into the future where it's time to start addressing financial matters on your own - even if you aren't responsible for rent or a mortgage, bills will start to come in for car payments, student loans and credit cards eventually. Are you reaching that point right about now?

If it's time to take things into your own hands, your first step should be to create a budget - here's how to get started:

1. Know your income. We're sure you're very clear on what your salary is, but you can't base your budget on your gross pay - rather, you need to focus on your net income. So, start by clearly defining how much your take-home pay actually is from all sources of income that you have.
2. List your monthly expenses. Once you know how much cash is coming in every month, make a list of all the expenses that will require you to send money out. During this step, you'll want to create two columns - one for fixed expenses (meaning they stay the same each month), and one for variable expenses (meaning they typically change). 
3. Add it up. Step three is to add up how much of your income will be used to pay bills so that you can figure out what you have left for savings or recreational purposes. If the numbers come up short and you find that your monthly expenses exceed your total income, see where you can reduce your spending (your variable expenses would be a good place to start). 
4. Pick your budgeting tool. Last but not least, you'll need to decide which budgeting tool works best for you. For example, will you use cash and create different envelopes for each expense? Or, will you use a software program specifically designed to help you better manage your money? This decision is completely up to you, but if you have trouble deciding, your financial planner can help you figure out what works best for your current situation and financial goals.

As a team of experienced financial planning professionals, we want you to remember just how powerful a budget can be - it's an extremely effective way to stay on top of your money and set yourself up for a successful financial future!

If you're in a place where it's time to create your first budget for yourself and need some assistance, we would be happy to help! To set up an appointment with us, call (516) 932-5130 or email info@americaninvestmentplanners.com today.