How to Set a Budget and Stick to It

Between “needs” (mortgage, car repairs, and college tuition) and “wants” (new clothes, entertainment), it isn’t easy to keep your hard-earned cash in your wallet – even when you’re trying to be responsible.

Considering that 80% of the average annual household income goes toward necessities such as housing, food, gas, and insurance, the importance of developing a budget is undeniable. A budget is nothing more than a tool that helps you stretch your paycheck as far as it will go – but it does take discipline, planning, and prioritization.

Follow these six easy steps to come up with a budget that can work for you:

1) Know your income. Pay attention to your net paycheck, not your salary.

2) Determine your basic expenses. Anticipate fixed bills, and come up with a way to fund a safety net in case you have an unexpected expense.

3) Determine expenses that vary each month. These are the ones that change based on usage, such as utilities, groceries, and entertainment.

4) Determine what’s really important. Digging into your variable expenses will help you eliminate extra fluff.

5) Follow your spending and review monthly. This will help give your budget a fighting chance.

6) Keep track. Use a spreadsheet or app to balance your budget. You’ll identify patterns and see where you can streamline and make adjustments.

Though it takes some time and effort to come up with and stick to a budget, you’ll find that it’s well worth it.


About cozbycpa

Heather L. Cozby is a CPA on the South Shore and Cape Cod. The managing partner of Cozby & Company, LLC, Heather has the resources and experience necessary to provide quality professional services on a timely basis and at a reasonable cost. She specializes in tax planning & preparation; audit, review & compilation services; management advisory services; bookkeeping; and accounting. Her unique niche is in working with homeowners’ associations and condominium trusts, advising with rental real estate, and providing outsourced financial consulting for mid-sized companies. She is more entrepreneurial than most accountants, and offers the best of both worlds - providing the services of a larger firm while retaining the ability to connect with her clients on a personal level.
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