With being a proud homeowner, you should invest some time in planning for the future. The best way to do this is to create a budget and stick to it. A budget will help you meet your monthly bills and it can help increase your savings. Your personal savings should be sufficient to last several months should you lose your job or source of income.
How to make a budget:
1. Track your spending. Keep a spending diary for a month or two to see how much money you spend on a daily and monthly basis. Record every dime you spend and how you spend it, whether by cash, check, debit card, ATM card, or credit card. Keep all receipts and slips. Gather your records. Organize the cash receipts as well as your credit card monthly statements and your checkbook register.
2. Itemize your income and expenses. Using receipts and bills, prepare an accurate account of where you’re spending your money. List your monthly income. This includes salary from jobs and any other income. List and total your monthly expenses. Based upon your spending diary, list expenses in the following categories: Housing – your mortgage; utilities – phone, cable TV, laundry, internet access; food – groceries, dinners out, snacks; auto – monthly car loan payments, maintenance, parking, gas, etc.; insurance – premiums for health, disability, dental, auto, and apartment. If you pay quarterly premiums, divide each by three to get a monthly figure; education – tuition, books, supplies, and the student loan payments (if any); entertainment – movies, parties, nightclubs, travel costs; clothing – include dry cleaning and repairs; personal care – toiletries, haircuts, gym membership; health – out of pocket expenses (not covered by insurance) for office visits, treatments, prescriptions; credit card debt – if you carry a balance on your credit card, list the amount you pay off each month; miscellaneous – gifts, unanticipated small expenses.
3. Total and compare the income and expenses columns to create your budget. Do you have any money left over? If so, you’re in good shape – you’re spending less then you’re earning. Why not budget the extra money to pay your credit card or other debts? If your expenses exceed your income, start reducing your expenses that aren’t fixed every month.
A good rule of thumb is to have three to six months of living expenses in emergency savings. Once you’ve figured out your monthly budget – and seen that you stick with it – try to save three to six times that much in a savings account or investment you can easily access. It’s okay if it takes a while, as long as you’re putting something aside each month.
1. Your payment history
2. How much you owe
3. The length of your credit history
4. How much new credit you have
5. The types of credit you use