In our previous blog, we discussed how you can begin rebuilding your credit with the right credit cards after you file for bankruptcy. Now that we have equipped you with that knowledge, it is time for you to learn about the next step in the process – creating a realistic budget.
Your budget does not need to be viewed as something that will steal all of the fun out of your life. On the contrary, done correctly, a realistic budget can give you room to continue pursuing the things and events that bring you joy while allowing you to pay for the necessities such as housing and food. Your budget should help you focus on where your money is going and devise strategies to save for your future.
Here’s how you can create a realistic budget and stick to it:
Take a Look at Your Expenses – First, examine your monthly bills and analyze your daily, weekly, and monthly habits. How much do you typically spend on transportation each month? Do you tend to buy lunch or frequent the vending machine during the workweek? Take a close and honest look at your spending habits – you might be surprised at how quickly the little things add up.
List Your Sources of Income – List all of your jobs and the income that you receive from them. Don’t forget to include any money you receive from self-employment, alimony or child support, retirement income, and public assistance, if applicable. Break your income down by pay period and total your average monthly income. The result will indicate the maximum amount of money that you can spend each month.
Compare Your Monthly Expenses to Your Income – If your expenses exceed your income, you will need to find a way to make some sacrifices. Maybe you can dine out less or make your morning cups of coffee at home instead of buying one every morning. If you keep coming up short, you might need to consider finding an additional job or renting a cheaper apartment.
Monitor Your Spending – Now that your budget has been created, you need to keep a close watch over your spending habits. Make it your mission to stick to your spending guidelines and save money where you can. Don’t be afraid to make any adjustments to your budget during this time as well if you think they are necessary. Your budget does not need to be set in stone, but it needs to be realistic.
Remind Yourself of the Reason – Making a budget and living within it are two very different things. While it is relatively easy to create your own budget, it can be challenging to stick with it. When times are challenging and you find yourself tempted to spend extraneously, remind yourself why you want to stick to your budget. You are doing it to break the habits that landed you in financial trouble and to save money for your future.
We hope that these tips will help you in creating a strong budget and give you more financial independence. Be sure to watch out for the third and final portion of our blog series: Let Go of Guilt and Look Toward a Better Future. Of course, you may always reach out to the experts at The Bankruptcy Advocates for help and a free consultation by calling (618) 549-9800.
Southern Illinois Bankruptcy Attorney law firm Bankruptcy Advocates is located in Carbondale and serves a wide geographic community. The first consultation is always free. Give us a call at 618-549-9800 or email us at [email protected] to speak about your case or legal matter. Convenient appointment times are available.