Learning to properly budget after bankruptcy and car loans is one of the best ways to prevent future financial stress. A budget will help you to organize your money. This way, it will be easy to tell what your spending habits are and where you can save. Having a successful budget can relieve much of your financial stress. If used correctly, it will ensure you stay on top of your goals and don’t splurge. To discover more on how to budget the right way, read below!
What is a Budget?
A budget is a spreadsheet or document that estimates your spending over a period of time. It can be done in various ways and it’s important to find a way that best works for you. Some people choose to manage their budget through an app and others find that a good ole spreadsheet does the trick. No matter what you choose, consistency is key in a successful budget.
Step 1: Determine your income, net income, and expenses
The first step to building any budget is figuring out how much you make, how much you spend + deductions, and the leftover total (net). Having this data will help you create a realistic budget that is reflective of your income and expenses. It’s easy to go overboard without this information. You can get details of your expenses from your bank, online banking app/website, and by keeping track of your receipts. Your monthly income figures (if you don’t already know them) can be acquired from your employer. If you receive any financial support from family or the government be sure to factor this into your income.
When you go to build your budget you will be using your Net Income. Your net income is simply the amount of money you have to spend after you factor in things like taxes, and other deductions.
Step 2: Track how you spend your money after bankruptcy and car loans.
After bankruptcy and car loans, your spending habits will likely have changed. If you think this is the case, track your spending habits for a month to get a better idea of how your expenditures have varied. For example, each day keep a total of how much money you use and what is being purchased. You can total this in a spreadsheet, in a note sheet on your phone, or on a piece of paper.
For those who think their spending habits have remained the same after bankruptcy and car loans, use your old data from previous months. This will help you to discover where you need to cut back and where you have room to save. Looking back on the preceding months is a great way to figure out how to prevent financial issues in the future. This is true no matter how your spending has changed.
Step 3: Create Budget Goals
Now that you’ve tracked your spending, it’s time to set some goals. Goals are a great way to stay motivated and on track with your budget. Every time you hit one of these goals, you will be reminded that it is possible to create a better financial future for yourself. Having short and long-term goals is the best way to keep motivation high. Short-term goals should be achievable in 12 months or less. These can include: making payments towards debt, creating an emergency fund, setting aside money for a vacation, paying rent and insurance, etc. These are all goals that can be done within a year’s time.
Long-term goals are tasks you’d like to accomplish over the next 1+ years. These can be completed in 1.5 years or 10 years. It’s totally up to you! Some examples of long-term goals include: paying off your mortgage, saving for retirement, funding your child’s education.
TIP: You can set short-term and mid-term goals as an incentive to continue to achieve your long-term goals. These could be things like hitting the halfway mark on your retirement savings goal, or mortgage payment.
Step 4: Build your budget and say goodbye to bankruptcy and car loans!
Now that you have a set of realistic goals, your monthly spending data, and income value, it’s time to put it all together. Input this data into your chosen budget method (spreadsheet, app, etc). Once you have allotted projected costs for each expense, you can go through and determine where you might be able to cut back. This might be something that you do after one or two months of using the budget correctly. Changing certain habits like eating out, weekly movie nights, and other unnecessary expenses can make a difference in your financial freedom. After going through and weeding out unneeded wants, try and cut back on certain needs. This could mean opting for a cheaper phone plan, figuring out better internet service pricing, etc.
Step 5: Keep at it!
The biggest part of having a successful budget is dedication. If you neglect your budget or don’t take it seriously you are more likely to fall back into old habits that landed you dealing with bankruptcy and car loans. It’s important to stay motivated and find joy in achieving your financial goals. Continue to edit and change your budget as your life evolves. This will ensure it stays accurate to your income, lifestyle, and needs.
Creating a budget after bankruptcy and car loans is so important! For more information on creating a successful budget contact us at Transcan Leasing today. We’d be happy to help you discover what it means to be financially free. For additional support, visit our social media here.