Budgeting can be tricky if you don’t know where to begin. Watch as Stefanie O’Connell shares her three quick tips to help you start a budget.
STEFANIE: Hi everyone, personal finance consultant Stefanie O’Connell from stefanieoconnell.com here with three quick tips to help you start or improve your budget today — brought to you by Allstate Insurance Company.
STEFANIE: What comes to mind when I say “your desired lifestyle?” Maybe a big house or a nice car or a dream vacation, but probably not budgets.
STEFANIE: In fact, the mere thought of budgeting may bum you out, thinking about what you have to sacrifice or cut out from your current spending.
STEFANIE: But in reality, budgets aren’t a bummer. In fact, they’re quite the opposite. The house, the car, the vacation, whatever the “desired lifestyle” looks like for you, your budget can be your roadmap for making it all happen!
STEFANIE: So, tip one is to get excited about budgeting. Rather than thinking of your budget as restrictive, think of it as your guide to building a life on your terms, goals and values. That’ll help make the habit of budgeting much easier to stick to — not to mention, more fun.
STEFANIE: Tip two is to track your spending. It’s hard to draw a path to where you want to go if you don’t understand where you currently stand.
STEFANIE: Track every dollar you spend for at least one month, using a spreadsheet or a smartphone app or simple pen and paper. This will help you get a clear idea of where your money is going, so that you can make informed decisions about how to structure your budget for future spending and align with your financial goals.
STEFANIE: Tip three is to define your priorities and adjust your spending accordingly. This is where tips one and two meet. It’s time to break down that vision of your desired life into concrete financial goals and incorporate them into your spending plan.
STEFANIE: Now that you’ve tracked your spending, you should have a clear picture of the cumulative cost of your necessities each month — housing, utilities, insurance, transportation, food, etc. Everything you need to live and work well.
STEFANIE: Subtract the total cost of your necessities from your monthly take home pay. You’ll be able to see exactly how much you have left over to split between discretionary expenses (like eating out and entertainment) and your financial goals (like retirement, paying off debts or saving for a down payment on a home).
STEFANIE: The most important thing is to build your budget around your priorities so that you can achieve the goals you value most.
STEFANIE: For more tips on how to set and stick to a plan on your terms visit allstate.com/blog and follow me @stefanieoconnell.