With a budget you’re able to make better decisions with your money because you have planned proactively. A budget also helps you to recognize potential problems before they arise, allowing you to adjust your commitments and lifestyle. Understanding the basics of establishing a realistic budget is a life skill that will benefit you for years to come. Below are five steps to effective budgeting:

1	Set Your Goals	» Setting financial goals will help you to establish priorities for how you spend and keep you focused on the future. Are you committed to paying down your student loans? Got your eye on a new car? Ready to stop paying rent and buy a house of your own? Do you dream about starting your own business some day?
2	Organize Your Expenses	» Gather your receipts, loan paperwork, expenses and monthly bills. Separate these items into two categories: Fixed Expenses: Items that do not change each month, like rent, car payment, insurance premiums and loan payments. Variable Expenses: Items that fluctuate due to your usage, like groceries, cellphone bill, gasoline, utilities, groceries, entertainment and supplies.
3	Establish a Budget Plan	» Look at your monthly expenses from Step 2 and track where your money is being spent. Where do you need to cut back? Do you need to increase your income? How can you save money on certain items or services?
4	Commit Your Budget to Paper	» Download a free budget worksheet from the Helpful Links section of www.navigatingyourfinancialfuture.org. Put your budget into action by listing your income and expenses.
5	Organize and Store Your Records in a Safe Place	» Create folders for various accounts you have and keep copies of all correspondence. Protect yourself from identity theft by safeguarding your records and shredding documents with personal identifying information, such as Social Security number, driver’s license number, and banking or credit card account numbers.

Tips to Save Money Now

•  Reduce your cellphone plan.
•  Buy secondhand clothing, furniture and appliances.
•  Cut the cable and use your computer to watch TV and movies.
•  Eat at home instead of dining at restaurants.
•  Pay down higher interest rate debts.
•  Spend less on gifts.
•  Use coupons.