You might be trying to get control of your finances but to no avail. Well, most financial advisors will start by taking an important step: establishing a budget. The coronavirus pandemic and its negative effect on the economy have made having a budget necessary for many Americans. According to Debt.com, 80% of those surveyed in 2021 have a budget, a 12% jump from 2019. Having a budget or scale of preference as to how you want to spend your money is the first step towards financial wellness. “I look at budgeting as being the principal thing to help you get from financial point A to financial point B,” said Frederick Standfield, a certified financial planner and founder of Lifewater wealth management in Atlanta. “It’s going to inform some critical decisions.”
Experts say the first step in creating a solid budget is to define your financial goals. You can think about your core values or your big-picture goals. Once you’ve got a clear picture of what you want to achieve, you will need to take a financial inventory of where you are, including your income, bills, and any debt at hand. Next, you will allocate part of your monthly salary to your essential expenses first, then your financial goals. If you have some leftover money, you can spend it on activities you like, such as eating out or traveling. If you don’t earn enough income to cover all your wants and save for your long-term goals, you may have to reduce your spending or save for a more extended period. These choices help shape your financial plan.