This is pretty much true for every single person in every single financial situation. Whether you’re a millionaire, or paycheck to paycheck, or homeless. You need to understand where your money is coming from and where it’s going.
This is pretty much true for every single person in every single financial situation. Whether you’re a millionaire, or paycheck to paycheck, or homeless. You need to understand where your money is coming from and where it’s going.
There’s basically two approaches to a budget: the “here’s what you should spend” approach and the “here’s what you are spending” approach. A lot of people looking at getting their finances under control will try the first approach without ever doing the second one, and it causes problems. You can set a goal like “only spend $100 a month on groceries”, but that’s totally arbitrary and may not work at all for your situation! It might be that the absolute bare bones minimum you (or your family) can get by on in your area is $150 a month of groceries, so then you break your budget every month so then you get depressed so then you stop budgeting.
My advice is to just track your actual spending for a few months. Don’t try to change everything at once. Focus on one category at a time, see if you can bring that down. Maybe you can, maybe you can’t. Don’t make an aspirational budget. Your very first budget should just be a basic list of what you actually spend. Once you know that, then you can decide a plan of action.