The first step toward your financial freedom is making a plan. Proverbs 21:5 says, “The plans of the diligent lead to profit as surely as haste leads to poverty.” There should be no mystery to your money…you should know what is coming in and what is going out and you should be ready to tell your money where to go so your money doesn’t tell you where it’s gone! Here are 5 steps you can take today to make your plan:
1. Download a budget worksheet. I highly recommend using the free resources on my friend Joe Sangl’s website, http://iwasbrokenowimnot.com/tools/.
2. Fill in your income and every expense. Be honest about your spending! Gather old bills and bank and credit card statements to get the real picture of your spending habits. If some expenses aren’t monthly, convert them into a monthly amount and include them in your plan.
3. Discuss your budget / spending plan with your spouse and agree upon expectations of spending and saving.
4. If you’re spending more than you’re making, cut expenses or increase income. Those are your only two options. DO NOT continue to live outside of your means.
5. Determine a method of tracking your expenses throughout the month. Some options include mint.com or Davy Ramsey’s envelope system or a good, old-fashioned notebook sitting on the kitchen counter. It’s not important how you track your spending, it’s just important that you do it!