Do you smell the odor of burning currency? If you ever find yourself wondering where your money went, then you need a budget. Without one, bills, debts, and morning lattes can quickly add up and send your cash up in smoke.
Documenting—on paper—how much money comes into your home, how much flows out, and how much you save is the first step toward tracking down those disappearing dollars.
Creating a budget can also help to uncover the source of financial problems. But according to the National Foundation for Credit Counseling, only 40% of American households use a budget. The rest take a hit-or-miss approach, never really knowing whether they’re living within their means, in need of a better-paying job, or in a position to rein in their debts.
The good news is budgeting isn’t difficult. One thing it does require is a deep look into your current financial picture and more than a bit of discipline. To show you how it’s done, black enterprise found three subjects in need of financial organization and paired them with advisers to help them draft workable budgets.
Chanel Graham worked two jobs to put herself through college, but six years after graduating she is still struggling to make ends meet. “I’m stabilizing after years of being in debt,” says Graham, co-founder of I Kissed Dating Hello, a website. With a monthly income of about $3,250 (she earns $250 each month from freelance writing jobs), Graham says she’s “frustrated by the constant feeling of not being able to pay the bills.”
With about $600 in savings, Graham pays $1,300 for housing and $100 for transportation every month. Credit card bills, food expenses, and miscellaneous spending cost her $1,450. As a devout Christian, she gives $350 per month in tithes to her church. Graham doesn’t have a budget, but she recently came up with a “plan” to save $500 a month.