Many people seem to be under the misconception that your finances have to be in order before you can start a budget. If they’re unemployed and not able to make ends meet, they think they need to get a job and increase their income before they can start the budgeting process.
The reality is that if you’re in that situation, you need a budget more than ever. “But how can I budget if I’m not making enough money to cover my basic expenses?” That’s WHY you need to create a budget. It will help you prioritize the money you do have coming in. You don’t want to go paying that credit card bill from your unemployment check, and then not have enough money to cover the rent.
The budgeting process should do more than just list your monthly income and expenses. It should also list those expenses in order of priority. Make sure your basic necessities of food, shelter, clothing, and transportation are covered before you pay your other bills. Write these at the top of your list of expenses. Put your unsecured debts, such as credit cards, at the bottom of the list. Begin subtracting those expenses from your income as you move down the list. When the money runs out, that’s where you stop and the credit cards can just wait until you get back on your feet again.
You will also find that when you write down your expenses and live to a budget, you will have more money. As you write things down and physically see where your money is going, you will find more ways to cut your expenses and free up more of your money to cover other expenses. Being disciplined and living on a budget is even more important when your income is low.
It is said that the best time to plant a shade tree is 20 years ago… but the second best time is TODAY! Get your budget started today, or better yet, right now.