Prepare a Budget to Help You Save

The first step to building a long-term savings and investing program is to prepare a budget that spells out how you spend your money. Work out a budget and stick to it so you can pay your bills and save for your long-term financial needs.

First write down all your expenses like rent or mortgage payment, utilities, insurance, car payment, car expenses, food, clothes, entertainment, vacations, presents, furnishings, medical, taxes and more. Then prioritize the items putting the most important expenses first. Be sure to include savings at or near the top of the list of expenses. Make savings at least ten percent of your total before tax income. If you can save more more, do so. If you can't save ten percent, then save as much as you can.

If your income does not cover your expenses, make adjustments to the expenses that are not absolutely necessary. You can cut back on gifts, vacations, entertainment, furnishings and purchases of more "stuff".

As you financial situation changes, adjust your budget accordingly. If you are fortunate to earn more money, increase your savings rather than spending.

Posted January 31, 2006.