Okay, so you set some new goals last week. Can you do them? Are they realistic? An important question to think about is: do you have enough time and money to do what you want to do? Here are some guidelines that will help set a household budget:
- Live within your means.
- Save first, spend afterward.
- Invest wisely – know how your dollars are being put to work – they might as well be doing something good in the world.
- Know how much you spend on necessities vs. discretionary items.
- Plan for everyday expenses and one-off expenses as well as allowing for unexpected expenses.
- Treat the numbers objectively. It’s better to pay off a high interest credit card first than a low interest one.
- If your expenses are higher than your income you have two options – reduce the amount you are spending and increase the amount you are earning.
- If you choose to carry debt, understand the consequences up front.
- Use banking software (if available) to track your spending so you have an accurate picture of what you spend, not just a guess.
Right now you are looking at the whole year, but of course things can change. Reassess your household budget mid-year if needed, or if big changes happen in your life, such as a new job, raise, or large unexpected expense.
Feel free to adjust your goals as needed!
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