5 Tips for Setting Up Your First Budget


Use Credit Card and Bank Statements

Experts agree that you shouldn't just estimate when you're setting up your budget. Figuring out your income is perhaps easy enough -- probably as easy as checking your past few paycheck stubs (unless you take alimony or are self-employed, for instance). However, although your money probably comes in from one source, it goes out through dozens.

You need to take the time to examine all your expenses carefully. The best way to do this is by using bank statements as well as credit card statements. These, unlike your imperfect memory, don't lie. You'll make some interesting revelations about exactly where your money goes. Even if you don't pay your full credit card bill every month (which you should start considering if it's possible,) you should use your credit card statement to find out what you spend your money on. This is important for finding out where you can cut back.

This could be the most arduous and painstaking step of setting up your first budget, but it's essential. Next, we'll tell you how to use that information.