Want to build a better budget? Three things to know about yourself

With more and more “things” out there for us to spend our money on, budgeting is becoming more important than ever.  Many of us now spend $10.00/month to stream our music, $15.00 or more for streaming movies, and a number of other things that can add up quickly.  You may not realize how much you're spending and oftentimes not even know how much money you even make!  Knowledge is power, so in order to get a handle on your finances, here are three things you need to know about yourself:

1. How much is my paycheck?  This is probably more important to know than what you make in an annual salary because this is the “starting amount” that you have to live on.  According to Bankrate.com, 76% of Americans live paycheck to paycheck.  That number is rising every year, no doubt due to the availability of money distractions, like entertainment and going out to eat.  If your income varies, you’ll want to collect a recent history of your paycheck amounts and come up with a best guess as to what that number should be.  Be conservative with your number, so you don’t overestimate how much you make.  Once you have this starting number, you’ll next look at your expenses.

2. What are my fixed expenses each month?  This should be fairly easy to figure out by looking at your bank statement (either online or printed) and/or your online bill pay.  Don’t forget to look at both monthly and irregular payments, like quarterly bills.  Make sure to also include medical expenses, like prescriptions, co-pays, etc.  Tally up this total fixed expense amount.  Again, be conservative and give yourself a cushion for those oddly-timed payments or things you may have missed, despite your best efforts.  You might also be taking money out of your paycheck and into a 401(k) or other savings vehicles.  If you're able to do this, great!  If you're not currently doing it, strongly consider if you can do so.  It's nice to "pay yourself" first.

Look at the dollar amount that’s left over.  This is the money you have to live on day-to-day.  Next, you’ll want to look at your variable (daily) spending.  Once you figure out the variable spending, your goal should be to have some money leftover that you can put into savings or something else that will improve your financial situation (i.e. life insurance, IRAs, etc.).

3. What are my variable expenses each month?  This amount consists of expenses like groceries, going out to eat, going to the movies—the things you do every day.  If you're not sure about these numbers, give FitFin a shot.  It will help you figure out this number and even has charts to help you see how these expenses change month-to-month.

Now that I know what I spend each month, what I’m trying to do is figure out how to decrease that amount without cramping my family’s style too much.  It’s definitely a work in progress, but Step #1 is knowing what I’m spending.  Using FitFin will not only help me know that (which is huge), but it also helps me know what I’m going to spend before I even go to the store.  That helps me keep a handle on today's spending. 

One day at a time, right?

Check out FitFin (it’s free) at www.fitfin.com.  FitFin can help you track your variable expenses quickly and easily.

Here’s to a very prosperous 2015!