I'm Budgeting for the First Time—What Do I Do?

I’m Budgeting for the First Time—What Do I Do?

May 30, 2020

Over the course of your life, you’ve likely sat through many classes teaching you everything from the alphabet to trigonometry. But most people find that when it comes time to creating a budget, they have no knowledge of how to do so. These first-time budget tips in Hayward, CA make it simple for you to learn how to manage your assets, cover your expenses, save money and have a little left over to splurge once in a while.

Start with a zero-based budget

Managing a zero-based budget every month is one of the most useful first-time budget tips in Hayward, CA. To make a zero-based budget, you write out a list of all your monthly income sources and expenses. Don’t forget to include seasonal expenses each month.

When you subtract your total expenses from your overall income, the total should equal zero. If you end up with a total that is a negative number, this means your income isn’t covering your expenses and you have to decrease your spending.

If you subtract your expenses from your income and you have more than zero dollars left over, you have to assign a purpose to that money. Maybe it’s to save for a new car or make a larger payment on your mortgage next month. If every dollar is accounted for, you won’t spend money that you don’t have.

Prioritize expenses

As you create your budget, you want to prioritize expenses that are absolutely necessary. These include rent/mortgage, food, utilities, transportation, paying off debt and saving. These expenses should be paid every month. Once you’ve worked those expenses into your budget, you can start adding in others, such as charitable donations, entertainment, clothing and so on.

Cut down on unnecessary expenses

We all have expenses that we can eliminate. From subscription services to eating out, and cable packages to shopping trips, you would be surprised how easy it is to find ways to minimize your costs. It’s hard to cut back on luxuries, but it makes life so much less stressful when you have some extra cash just in case you need it.

Budget together

Managing and sticking to a budget is a team effort. Couples with shared expenses should take time every month to look at their budget for the weeks ahead. This helps everyone stay on the same page so there’s no confusion or uncertainty about money.

Get rid of credit cards

Credit cards create the illusion that we have more money than we actually do, meaning we overspend and end up further in debt. If you really want to adhere to a budget so you can save more and build up a large emergency fund, say “goodbye” to your credit cards. Shred them, remove them as payment options and only pay down your outstanding costs.

A checking account and a debit card are all you need. Yes, it is a bit of a transition to stop spending on credit cards, but it makes a noticeable difference in your budgeting efforts.

Working with an expert CPA is one of the most helpful first-time budget tips in Hayward, CA. Firms such as Menjivar & Company CPAs, Inc. can help you minimize your tax payments and maximize your returns. Contact us today to schedule an appointment.

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