Budgeting Links
Budget Worksheet
Gain Control of Your
Finances in 5 Easy Steps
Tips for Sticking to a Budget
Teaching Your Children
Money Management
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1.
ASSESS
The first step is to assess your current
financial situation. Start by calculating your net worth.
List all your assets (what you own) and all your liabilities
(what you owe). If your assets exceed your liabilities, you
have a positive net worth. If you have more liabilities than
assets, your net worth is negative. At the end of each year,
recalculate your assets and liabilities to determine your
progress toward building your net worth.
2. IDENTIFY
Once you have a clear idea of your financial picture, you
should set financial goals. Whether your plans call for
buying a home, taking a vacation, retiring early, or paying
off debt, your financial goals help you determine what is
important to you. Financial goals also serve to motivate you
– it’s always easier to save money when you know what you
are saving for.
CPAs recommend that you divide your goals into short-,
medium-, and long-term goals. Be sure each goal is focused,
realistic, measurable, and has a specific target date. You
should review your goals regularly and make adjustments when
necessary.
3. BUDGET
Your next step is to create a budget that will help you
attain your financial goals. The key is to spend less than
you earn. The first step in preparing a budget is to figure
out your current cash flow. Start by adding up your income
from your salary, bonuses, investment income, and any money
you get from other sources.
Next, track all your expenses for a month or two. That
includes regular expenses, such as your mortgage or rent,
food, transportation, insurance, and credit card payments,
as well as discretionary expenses, including entertainment,
dining out, and gifts. Be sure to factor in expenses that do
not occur every month.
It’s important that you record every dollar you spend,
whether it's with cash, check, or credit card. Seeing how
you are spending your money will help you determine where
you can make cuts and redirect that money toward meeting
your financial goals.
When creating your budget, be sure to pay yourself first.
That means deciding how much you can save each month and
treating it like any other bill. Better yet, have the money
automatically deducted from your paycheck and deposited into
a savings account. You won’t miss what you don’t see.
(Get started with our
budget worksheet.)
MANAGE
Managing debt is a critical step in gaining control of your
finances. If you are carrying a high level of debt, make
paying down your credit cards a priority. There are several
strategies you can use, such as consolidating your debt on a
credit card with a lower interest rate and/or paying off
high-interest debt first. But the best way to reduce debt is
to double or triple your card’s minimum monthly payments.
Depending on your balance, higher payments could save you
thousands in interest payments and shave months, or maybe
even years, off your debt.
PROSPER
There’s a great deal of peace of mind that comes with
gaining control of your finances. If you need help in
completing these steps, contact a CPA. He or she can work
with you to create a plan for achieving your financial
goals.
Brought
to you by the North Carolina Association of Certified Public
Accountants in cooperation with the AICPA.
©2007 The American Institute of Certified Public Accountants |
Brought to you by the North Carolina Association
of Certified Public
Accountants as part of its financial literacy
initiative, a community outreach program dedicated to improving the
financial standing of all North Carolinians.
The North Carolina Association of CPAs :: PO Box 80188
:: Raleigh, NC 27623-0188 :: (800) 722-2836 ::
www.ncacpa.org |
